DCIT Vs Shoppers Stop Limited (ITAT Mumbai)
The Revenue appealed against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] for Assessment Year 2023-24, challenging the deletion of an addition made by the Assessing Officer (AO) on account of notional interest on interest-free loans and advances provided by the assessee to its subsidiary, Gateway Multichannel Retail (India) Limited. The AO had added notional interest at 9% under Section 5 of the Income-tax Act, holding that interest income had accrued because the assessee had extended interest-free loans amounting to Rs. 2,329.10 lakh to its subsidiary. The Revenue contended that the CIT(A) wrongly ignored the principle of accrual of income, improperly applied the doctrine of real income, failed to appreciate the subsidiary’s contractual liability to pay interest, and relied solely on earlier Tribunal decisions despite the Revenue’s appeals being pending before the Bombay High Court.
The assessee submitted that the identical issue had consistently been decided in its favour in earlier assessment years. It pointed out that the CIT(A) had deleted similar additions for Assessment Years 2011-12 to 2018-19, 2020-21 and 2021-22, while the Mumbai ITAT had also upheld the deletion for Assessment Years 2009-10, 2010-11, 2012-13, 2013-14, 2014-15, 2016-17, 2017-18 and 2018-19. The assessee argued that there was no change in facts warranting a different view for the year under consideration.
