2013 (2) TMI 829 - AT - Income Tax

Tribunal Upholds CIT(A) Decisions on Deduction Disallowance, Rejects Revenue Appeal

The Tribunal upheld the decisions of the ld. CIT(A) in both issues, dismissing the appeal of the Revenue on 27.2.2013. The disallowance of deduction under ... - Issues involved: Appeal against order deleting disallowance of deduction u/s 80IC on capital introduced by partners and interest on unsecured loans.Disallowed Deduction on Capital Introduced by Partners:The Assessing Officer disallowed deduction u/s 80IC as interest was not charged on capital contribution by partners. The ld. CIT(A) allowed relief based on Tribunal's decision for a previous year. The Tribunal upheld the decision, stating that the absence of interest payment did not lead to increased profits. The Tribunal emphasized the need for a close connection and arrangement resulting in higher profits between the assessee and partners to invoke Section 80IA(10). The Tribunal found no liability for remuneration or interest on capital contribution, thus rejecting the disallowance.Disallowed Deduction on Interest on Unsecured Loans:The Assessing Officer disallowed a portion of deduction u/s 80IC due to lower interest on unsecured loans. The ld. CIT(A) ruled in favor of the assessee, stating that interest payment on every unsecured loan is not mandatory and depends on the arrangement between parties. The Tribunal decided against the Revenue, citing the precedent regarding non-charging of interest on partner's capital, as applicable to this issue. Consequently, the appeal of the Revenue was dismissed.In conclusion, the Tribunal upheld the decisions of the ld. CIT(A) in both issues, dismissing the appeal of the Revenue on 27.2.2013.