Ghaziabad Containers Pvt. Ltd. Vs ACIT (ITAT Delhi)
The ITAT Delhi considered an appeal against the order of the CIT(A)-29, New Delhi dated 24.03.2025, which had confirmed an addition of ₹32,94,713 under Section 36(1)(iii) of the Income-tax Act, 1961 and an addition of ₹1,34,535 under Section 14A read with Rule 8D of the Income-tax Rules, 1962.
During the assessment proceedings, the Assessing Officer observed that the assessee had claimed deduction of interest on borrowed funds and had also made investments in shares and mutual funds. The Assessing Officer treated certain amounts as interest-free advances to sister concerns and made the additions under Section 36(1)(iii) and Section 14A read with Rule 8D. The CIT(A) dismissed the assessee’s challenge to the interest disallowance while restricting the Section 14A disallowance to the extent of exempt income earned.
Before the Tribunal, the assessee contended that the alleged interest-free advance of ₹6,20,95,039 was actually payment made through HDFC Bank against purchases from Shri Krishna Polymer Industries Pvt. Ltd., and that another amount represented payment relating to purchases from VAN Inks and Chemicals Pvt. Ltd. It was submitted that these payments had been inadvertently shown as loans in the balance sheet. The assessee also contended that no exempt income had been earned during the relevant assessment year and that the investment of ₹2,69,06,921 represented an opening balance rather than an investment made during the relevant year.
