2012 (12) TMI 442 - AT - Income Tax

Tribunal rules in favor of assessee on appeal grounds, overturning interest disallowance, allowing additional ground.

Saimangal Investrade Ltd. Versus Asstt. Commissioner of Income Tax Central Circle–40, Mumbai

Saimangal Investrade Ltd. Versus Asstt. Commissioner of Income Tax Central Circle–40, Mumbai - TMI Issues:1. Disallowance of business loss including transaction backed delivery as non-genuine.2. Disallowance of interest.3. Non-admittance of additional ground of appeal regarding non-allowability of interest on unsecured loans.4. Charging of interest under sections 234B of the Act.Analysis:Issue 1:The appeal was against the disallowance of business loss, including transaction backed delivery, deemed non-genuine. The assessee argued that a co-ordinate bench decision favored them, citing consistent valuation policies. The Tribunal, following previous decisions, ruled in favor of the assessee, setting aside the Commissioner's order.Issue 2:Regarding the disallowance of interest, the Tribunal referred to earlier years' decisions and found that interest was payable for commercial expediency, with no fresh borrowings during the year. The Tribunal directed the Revenue to allow the interest claim, setting aside the Commissioner's order.Issue 3:The challenge was against the non-admittance of an additional ground on non-allowability of interest on unsecured loans. The Tribunal considered a similar case's decision, where interest not provided in accounts could still be allowed if the liability existed. Relying on this precedent, the Tribunal allowed the ground raised by the assessee.Issue 4:The final issue concerned the charging of interest under sections 234B of the Act. The Tribunal held that such interest was consequential and directed the Assessing Officer to give effect in line with their findings. Consequently, the assessee's appeal was allowed, favoring them on all grounds raised.