Appeal partly allowed on interest disallowance; TDS disallowance upheld. Precedents and statutes cited.

The Tribunal partly allowed the appeal, setting aside the disallowance of interest paid against loans from the director and inter corporate deposit. However, the disallowance of interest paid on TDS was affirmed in favor of the revenue. The decision was based on precedents and statutory provisions, with the judgment pronounced on 28/10/2020.

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Issues Involved:
1. Disallowance of interest paid against loans from director and inter corporate deposit.
2. Disallowance of interest paid on TDS.

Issue No. 1:
The assessee challenged the disallowance of interest paid against loans from the director and inter corporate deposit, totaling Rs. 60,23,999. The Tribunal noted that a similar issue was decided in favor of the assessee for the A.Y. 2012-13. The Tribunal referred to the decision where it was held that interest paid on loans for business purposes is allowable as a deduction under section 36(1)(iii). The Tribunal found that the facts were not distinguishable, and in line with the previous decision, set aside the CIT(A)'s finding and allowed the claim of the assessee.

Issue No. 2:
The assessee contested the disallowance of interest paid on TDS amounting to Rs. 12,380. The Tribunal acknowledged that the issue had been decided against the assessee by the Bombay High Court in a previous case. The High Court held that such interest payments were not allowable as business expenditure under section 37 of the Income-tax Act. Consequently, the Tribunal affirmed the CIT(A)'s finding and decided this issue in favor of the revenue.

In conclusion, the Tribunal partly allowed the appeal of the assessee, setting aside the disallowance of interest paid against loans from the director and inter corporate deposit but affirming the disallowance of interest paid on TDS. The judgment was pronounced on 28/10/2020.

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