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of <h1>Tribunal adjusts interest rate, disallows interest on advance, upholds decision for repayment period.</h1> <h3>M/s. Rajshree Vanijya Pvt. Ltd. Versus I.T.O. Ward 2 (1), Kolkata</h3> M/s. Rajshree Vanijya Pvt. Ltd. Versus I.T.O. Ward 2 (1), Kolkata - TMI Issues: Disallowance of interest on interest-free advance to M/s. Phool Commercial Pvt. Ltd.Analysis:1. The appeal was filed against the order of Ld. CIT(A) regarding the disallowance made by the A.O. on interest attributable to interest-free advance given to M/s. Phool Commercial Pvt. Ltd.2. The A.O. disallowed interest expenditure as the advance was not for business purposes, leading to a disallowance of &8377; 22,48,695.3. Ld. CIT(A) partly sustained the disallowance, directing the A.O. to disallow interest @ 15% P.A. on specific advances made by the assessee to M/s. Phool Commercial Pvt. Ltd.4. The assessee contended that the interest rate should be 13% instead of 15%, as per the bank's overdraft rate, which was accepted by the Tribunal.5. Another issue was the disallowance of interest on a specific amount of &8377; 51,00,000, which was part of the opening balance of the advance to M/s. Phool Commercial Pvt. Ltd.6. The Tribunal upheld the disallowance of interest on the &8377; 51,00,000 amount for the period from 01.04.2009 until repayment by M/s. Phool Commercial Pvt. Ltd., at 13% P.A.7. The Tribunal partially allowed the appeal, modifying the interest rate and upholding the disallowance on the specific amount, as directed by Ld. CIT(A).This detailed analysis covers the issues involved in the judgment, including the disallowance of interest on interest-free advances and the specific amounts involved. The Tribunal's decision and reasoning behind modifying the interest rate and upholding the disallowance on the specific amount have been comprehensively explained.
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