Case Law Details
Intervo Technologies Pvt. Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that amount advanced to subsidiary companies out of commercial expediency, accordingly, disallowance of interest claimed under section 36(1)(iii) of the Income Tax Act unsustainable.
Facts- Assessee is engaged in the business of call center operation, maintenance and repairs service, non-technology software services. During the assessment proceedings, AO required the assessee to substantiate the claim of interest expenses. AO had observed that assessee has advanced loans to its subsidiary companies.
AO further noted that assessee has not charged any interest on the finds advanced to its subsidiaries and, therefore, why not the proportionate disallowance be made in respect of the interest expenses claimed by the assessee. Assessee submitted its explanation but could not satisfy the Ld. AO leading to a disallowance of Rs. 1,05,93,760/- calculated @ 12% on the opening balance of the loans/advances outstanding.
CIT(A) sustained the disallowance made by AO. Being aggrieved, the present appeal is filed.
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