Case Law Details
DCIT Vs Ansaldo Caldaie Boilers India Private Limited (ITAT Chennai)
ITAT Chennai held that CIT(A) deleted disallowance of interest made u/s 36(1)(iii) based on the fresh evidences furnished by the assessee. However, CIT(A) failed to afford an opportunity to AO to verify the fresh evidence which is in violation of Rule 46A and hence order remanded back to AO to verify the evidences.
Facts- AO noted that the assessee has claimed a sum of ₹.8,59,47,532/- as finance cost for the year under consideration. The interest bearing funds borrowed by the assessee as on 31.03.2015 includes long term loans at ₹.32,18,49,972/- and the short term loans at ₹.19,92,21,313/-totalling to ₹.52,10,71,285/-. The assessee has incurred interest expenses to the tune of ₹.8,59,47,532/- as finance cot in respect of the above borrowings and has charged off the same to profit and loss account. AO has also noted that the assessee has advanced a sum of ₹.15,00,00,000/- as advance for purchase of land for which an agreement has been entered into but no registration has been taken place and therefore, not put to use by the assessee. From the balance sheet, AO has noted that the assessee has utilized interest bearing funds for the advance given for purchase of land and during the course of scrutiny the assessee was asked to show-cause as to why proportionate interest should not be disallowed u/s. 36(1)(iii) of the Act.
AO disallowed the sum of ₹.2,47,41,586/- [computed as ₹.8,59,47,532 x (₹.15,00,00,000/ ₹.52,10,71,285] proportionate to the amounts advanced not for the purpose of business and added back to the total income.
CIT(A) allowed the appeal. Being aggrieved, revenue has preferred the present appeal.
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