2016 (7) TMI 60 - HC - Income Tax

Addition u/s 36(1)(iii) on account of interest disallowed - interest free advances and loans were also given to directors and sister concerns which are for non business purposes - Held that - In view of the fact that the issue is covered by the decision of the jurisdictional High Court in the case of Reliance Utilities 2009 (1) TMI 4 - BOMBAY HIGH COURT giving clear finding that the assessee had interest free funds of its own .Tribunal was justified in deleting the addition - Decided in favour of assessee

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal for Assessment Year 2007-08 under Section 260A of the Income Tax Act, 1961.
2. Deletion of addition under Section 36(1)(iii) on account of interest disallowed when interest-free advances and loans were given to directors and sister concerns.
3. Justification for deleting the addition made by the A.O. under Section 36(1)(iii) despite interest-free advances to directors and sister concerns.
4. Reliance on previous Tribunal and High Court decisions for the same assessee.

Analysis:

Issue 1:
The appellant challenged the order of the Income Tax Appellate Tribunal for Assessment Year 2007-08 under Section 260A of the Income Tax Act, 1961. The Tribunal's decision was based on the appellant's appeal regarding the addition of a specific amount under Section 36(1)(iii) concerning interest disallowed. The appellant's counsel raised questions of law regarding the justification for deleting this addition in light of interest-free advances and loans provided to directors and sister concerns for non-business purposes.

Issue 2:
The Tribunal's decision to delete the addition under Section 36(1)(iii) was influenced by its reliance on a previous order passed for the same assessee in the preceding assessment year 2006-07. This reliance was further supported by a decision of the High Court in the case of CIT vs. Reliance Utilities. The appellant's counsel did not appeal the Tribunal's decision for the A.Y. 2006-07, as the issue was deemed covered by the High Court decision. Notably, no distinguishing features were highlighted for the subject assessment year to warrant a different view from the Tribunal's decision for the A.Y. 2006-07. Consequently, the questions raised by the appellant's counsel were not considered to give rise to any substantial question of law and were not entertained.

Issue 3:
The Tribunal's decision to delete the addition under Section 36(1)(iii) was based on the precedent set by its Coordinate bench and the High Court decision in a related case. The lack of appeal by the Revenue against the Tribunal's decision for the A.Y. 2006-07, coupled with the absence of distinguishing features for the current assessment year, led to the dismissal of the appeal. The appellant's arguments regarding the interest-free advances to directors and sister concerns were not deemed sufficient to challenge the Tribunal's decision.

Issue 4:
The reliance on previous Tribunal and High Court decisions for the same assessee played a crucial role in the dismissal of the appellant's challenge to the Tribunal's order for Assessment Year 2007-08. The consistency in decisions across assessment years and the absence of new grounds for appeal contributed to the rejection of the appellant's contentions. The appeal was ultimately dismissed with no order as to costs.

This detailed analysis highlights the legal intricacies and precedents considered in the judgment, emphasizing the significance of prior decisions and the lack of substantial legal questions raised by the appellant in challenging the Tribunal's order.

← Previous Next →