2020 (11) TMI 212 - AT - Income Tax

Interest on loans taken from director and inter corporate deposit - Whether loan is wholly and exclusively for the purpose of business activities - HELD THAT - The issue has duly been covered by the assessee's own case for the A.Y. 2012-13 in 2019 (7) TMI 1708 - ITAT MUMBAI , therefore, by honoring the decision of the Hon'ble ITAT, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. - Decided in favour of assessee. Disallowance of interest paid oil TDS - HELD THAT - As admitted by Ld. Representative of the assessee that the issue has been decided against the assessee in the case of Ferro Alloys Corporation Ltd. Vs. CIT 1991 (12) TMI 39 - BOMBAY HIGH COURT - Decided in favour of the revenue.

Summary

Issues Involved:
1. Disallowance of interest paid against loans from director and inter corporate deposit.
2. Disallowance of interest paid on TDS.

Issue No. 1:
The assessee challenged the disallowance of interest paid against loans from the director and inter corporate deposit, totaling ?60,23,999. The Tribunal noted that a similar issue was decided in favor of the assessee for the A.Y. 2012-13. The Tribunal referred to the decision where it was held that interest paid on loans for business purposes is allowable as a deduction under section 36(1)(iii). The Tribunal found that the facts were not distinguishable, and in line with the previous decision, set aside the CIT(A)'s finding and allowed the claim of the assessee.

Issue No. 2:
The assessee contested the disallowance of interest paid on TDS amounting to ?12,380. The Tribunal acknowledged that the issue had been decided against the assessee by the Bombay High Court in a previous case. The High Court held that such interest payments were not allowable as business expenditure under section 37 of the Income-tax Act. Consequently, the Tribunal affirmed the CIT(A)'s finding and decided this issue in favor of the revenue.

In conclusion, the Tribunal partly allowed the appeal of the assessee, setting aside the disallowance of interest paid against loans from the director and inter corporate deposit but affirming the disallowance of interest paid on TDS. The judgment was pronounced on 28/10/2020.