Tribunal upholds CIT(A) decision on interest disallowance for trading activities.

The Tribunal dismissed the appeal against the CIT(A) order for the assessment year 2007-08. The Assessing Officer's additions for non-provision of interest on outstanding amounts to the State Govt. and from Food Corporation of India were deleted by the CIT(A) based on a previous order in favor of the assessee for the assessment year 2006-07. The Tribunal upheld the CIT(A) decision, ruling that the outstanding amounts were related to trading activities, not interest-free advances, and therefore no disallowance of interest expenditure was warranted.

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Issues involved: Appeal against CIT(A) order for assessment year 2007-08 regarding deletion of additions for non-provision of interest on outstanding amounts.

Issue 1 - Addition of interest on outstanding amount to State Govt.:
The Assessing Officer added interest on outstanding amount of &8377; 39.30 crores due to the State Govt. The CIT(A) deleted this addition based on a previous order in the assessee's favor for the assessment year 2006-07.

Issue 2 - Addition of interest on amount receivable from Food Corporation of India (FCI):
The Assessing Officer disallowed interest of &8377; 12.72 crores on the outstanding amount of &8377; 106.03 crores receivable from FCI. The CIT(A) deleted this addition, also relying on the previous order for the assessment year 2006-07.

The Tribunal upheld the CIT(A) order for both issues, stating that the outstanding amounts were on account of trading activities and not interest-free advances, hence no disallowance of interest expenditure was justified. The Tribunal dismissed the appeal, noting the similarity of facts with the assessment year 2006-07 and following the previous order.

In conclusion, the appeal against the CIT(A) order for the assessment year 2007-08 was dismissed by the Tribunal based on the precedent set in the assessment year 2006-07, where additions for non-provision of interest were deleted in favor of the assessee.

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