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of <h1>Tribunal allows interest deduction, dismisses Revenue's appeal. Rent disallowance issue referred back to AO.</h1> <h3>Income-tax Officer Versus Smt. Vandana Goel,</h3> Income-tax Officer Versus Smt. Vandana Goel, - TMI Issues:1. Disallowance of interest paid for non-business purposes.2. Disallowance of rent as per provisions of section 40(a)(ia) of the Income-tax Act, 1961.Issue 1: Disallowance of interest paid for non-business purposesThe Revenue appealed against the deletion of an addition of Rs.427490 made by the ld. CIT(A) on account of disallowance of interest paid for non-business purposes. The Revenue contended that the CIT(A) erred in deleting the addition, while the AR argued that a similar issue was allowed in the previous year without any appeal from the Revenue. The CIT(A) upheld the appeal, citing that the issue was covered in favor of the appellant for the A.Y. 2006-07, and the interest claimed was allowed as it fell under an adventure in the nature of trade. The Tribunal upheld the CIT(A)'s decision, stating that the revenue had accepted the finality of the issue by not filing an appeal, and financial expenses were eligible for deduction under Section 2(13) of the Act. Consequently, the Tribunal dismissed the Revenue's appeal on this ground.Issue 2: Disallowance of rent as per provisions of section 40(a)(ia) of the ActThe Revenue challenged the deletion of an addition of Rs.198000 made by the CIT(A) on account of disallowance of rent under section 40(a)(ia) of the Act. The CIT(A) allowed the appeal of the assessee, citing a relevant case law and directed the deletion of the disallowance made by the AO. The AR argued that the issue was covered by a decision of the Special Bench of the Vishakhapatnam Tribunal. Both the AR and DR agreed that the issue was squarely covered by the Special Bench decision. The Tribunal, in line with the Special Bench decision, restored the issue to the AO for fresh adjudication, directing verification of the actual rent paid by the assessee during the relevant financial year. The issue was restored for this limited purpose, and the ground of appeal was allowed for statistical purposes.General:The third ground of appeal was deemed general in nature and required no separate adjudication. The appeal of the Revenue was partly allowed, and the order was pronounced in the Open Court on 28th May 2012.
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