Ardor Overseas Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that disallowance of interest u/s. 36(1)(iii) of the Income Tax Act not justified since the amount introduced by way of unsecured loans proved to be genuine. Accordingly, disallowance of interest deleted.
Facts- M/s. Nikshal Properties Pvt. Ltd. (NPPL) had sold land to M/s. Ardor Overseas Pvt. Ltd.(AOPL).In the return of income filed by NPPL, capital gain on account of the said transaction was shown and the same entirely set off against loss incurred on commodity transaction.
During assessment proceedings, NPPL, the assessee, was asked to prove the genuineness of the commodity loss claimed by it, which the assessee contended was bogus. AO treated only the loss incurred on commodity transaction to be bogus and taxed the short term capital gains returned by the assessee, rejecting its explanation of the same being a mere accommodation entry.
AO of AOPL, noted that Rs.44 crores paid by M/s. Ardor Overseas Pvt. Ltd. to M/s. Nikshal Properties Pvt. Ltd. had been routed back to the assessee M/s. Ardor Overseas Pvt. Ltd. through an entity M/s Matrix International, and finding Matrix International to have advanced loan during the year, he treated the loan so advanced to be from unexplained sources and thus added to the income of the assessee in terms of the provisions of Section 68 of the Act.
