Case Law Details
PCIT Vs B.T. Patil & Sons Belgaum Construction P Ltd (Bombay High Court)
The issue under consideration is whether the Tribunal is correct in disallowing the deduction of interest expenditure on the ground that the assessee had diverted interest bearing funds for non-business purposes?
In the present case, The assessee had outstanding balance shown in the ledger accounts of the piece workers which remained unchanged through out the year. According to the Assessing Officer, this would show that no work was carried out by these parties. The assessee had shown to have advanced sizable amount to this so called piece workers. The Assessing Officer was of the opinion that this was diversion of assessee’s funds which were otherwise interest bearing on which the assessee would have claimed interest expenditure.
High Court states that, the assessee supplied a statement showing the amount paid, bills adjusted and the balance payable in respect of sub-contractors for whom the job workers were doing the work. Further, the Tribunal dismissed the Revenue’s appeal inter alia accepting CIT(A)’s observation that the assessee had his own sufficient interest free funds which were much higher than the advances made by the assessee. Thus, no interest bearing funds were utilized by the assessee for such purpose. Essentially, this is a question of facts concurrently held by the CIT(A) as well as Tribunal in favour of the assessee. No question of law arises in this respect. Hence HC dismissed the appeal filed by the revenue.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
