Mahak Industries Pvt. Ltd. Vs ITO (ITAT Delhi)
ITAT Delhi Deletes 36(1)(iii) Interest Disallowance Following Earlier Year & Upholds Remand of Rent/Salary Expenses for Verification
Mahak Industries Pvt Ltd appealed against two surviving issues—(i) ₹29,49,583 disallowance of interest u/s 36(1)(iii) sustained by CIT(A), & (ii) ₹3,95,318 disallowance of rent, salary & wages, which CIT(A) had remanded back to AO for verification.
The Tribunal noted that the interest disallowance issue was identically decided in assessee’s own case for AY 2015-16 (ITA No.661/Del/2024, dated 09.07.2025), where the coordinate bench had accepted the assessee’s position. Since the facts remained unchanged & loans & advances had actually reduced during the year, ITAT held that the CIT(A)’s proportionate disallowance could not survive, & therefore deleted the entire ₹29.49 lakh disallowance, granting full consequential relief.
On the second issue, the AO had disallowed 100% of rent & salary expenses in absence of documentary evidence, although the business was admittedly operational throughout the year. CIT(A) had taken a balanced view & remanded the issue for verification of supporting documents. ITAT found no infirmity in this approach, observing that ledger copies alone were not primary evidence; hence the matter rightly required factual verification at AO’s end.
Result:
- 36(1)(iii) interest disallowance of ₹29,49,583 deleted in full.
- Disallowance of rent/salary expenses upheld to be verified by AO as directed by CIT(A).
- Appeal partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
