2010 (12) TMI 1305 - AT - Income Tax

Summary

Issues involved: Disallowance of prior period expenses and disallowance of interest towards purchase of shares of associate concern.

For the disallowance of prior period expenses, the appellant contested that the disallowance of prior period expenses without considering detailed submissions was erroneous. The appellant provided detailed explanations for various amounts related to different transport companies and argued that the expenses were crystallized during the year. The Tribunal found that the necessary details for such expenses were available in the documents filed by the assessee and concluded that the expenses were crystallized during the year, thus allowing the appellant's ground.

Regarding the disallowance of interest towards the purchase of shares of an associate concern, the appellant claimed that the issue was covered in their favor by a previous Tribunal decision. The appellant had invested in shares of an allied company to avail sales tax exemption. The Assessing Officer disallowed the interest paid on borrowed funds for non-business purposes. However, the Tribunal considered various past decisions and found that the appellant derived benefits under a sales tax deferred scheme/exemption scheme, which justified not making any disallowance. The Tribunal also cited relevant court decisions to support the appellant's claim. Ultimately, the Tribunal allowed the appeal of the assessee, emphasizing that no interest was disallowable in this case.

In conclusion, the Tribunal allowed the appeal of the assessee in both the issues of disallowance of prior period expenses and disallowance of interest towards the purchase of shares of an associate concern.