Appeal dismissed: Expenditure claim allowed under section 36(1)(iii) for AY 2014-15

The Revenue's appeal against the Commissioner of Income Tax (Appeals)-2, Chennai, regarding the allowance of expenditure claimed u/s.36(1)(iii) of the Act for the AY 2014-15 was dismissed by the Tribunal. The Tribunal upheld the CIT(A)'s decision to allow the expenditure claimed by the assessee, citing previous favorable rulings and judicial discipline. The Tribunal found no reason to interfere with the CIT(A)'s order, leading to the dismissal of the Revenue's appeal on July 22, 2019, in Chennai.

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Issues:
Appeal against Order of CIT (A) allowing expenditure claimed u/s.36(1)(iii) of the Act.

Analysis:
The appeal was filed by the Revenue against the Order of the Commissioner of Income Tax (Appeals)-2, Chennai, regarding the allowance of expenditure claimed u/s.36(1)(iii) of the Act for the AY 2014-15. Both parties agreed that the only issue in the Revenue's appeal was against the action of the CIT(A) in allowing the expenditure claimed. It was acknowledged that the issue was covered by decisions of the Tribunal in the assessee's own case for preceding assessment years. The Tribunal had previously held in favor of the assessee, citing the cash basis of accounting system and the absence of selective charging of interest as reasons for the disparity between interest received and paid. The Tribunal also referred to previous judgments supporting the assessee being considered an investment company, justifying the deduction u/s.36(1)(iii) for interest paid when capital was borrowed for business purposes.

The Revenue had not accepted the previous decisions, and appeals were pending. After hearing both sides and reviewing the material on record, the Tribunal found that the issue raised in the Revenue's appeal was already addressed in the assessee's favor in previous decisions. The CIT(A) had appropriately followed judicial discipline by deleting the disallowance made by the Assessing Officer, based on the Tribunal's previous rulings in the assessee's case. Consequently, the Tribunal saw no reason to interfere with the CIT(A)'s order, leading to the dismissal of the Revenue's appeal. The appeal of the Revenue was dismissed, and the order was pronounced on July 22, 2019, in Chennai.

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