Tribunal upholds disallowance of interest payment & refers TDS, Advance Tax claim for verification

The Tribunal upheld the disallowance of interest payment to M/s.Gajmukh Investments Private Limited due to lack of supporting documentation, directing the Assessing Officer to verify the provided documents. The issue of TDS and Advance Tax claim was restored back to the Assessing Officer for further verification as the power to set aside by the CIT(A) was no longer applicable post the Finance Act, 2001. The appeal was treated as allowed for statistical purposes regarding these issues.

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Issues Involved:
1. Disallowance of interest payment to M/s.Gajmukh Investments Private Limited.
2. Disallowance of TDS and Advance Tax claim.

Issue 1: Disallowance of interest payment to M/s.Gajmukh Investments Private Limited:

The Assessing Officer disallowed the interest payment of Rs. 94,28,655 claimed by the assessee, as it was found that the total outstanding advance from Gajmukh was only Rs. 55 lakhs, making the interest claimed disproportionate. The appellant argued that the interest was paid for a loan from M/s.Gajmukh, and the amount was repaid in the accounting year 2012-13. However, the appellant failed to provide detailed workings of the interest claimed, supporting documentary evidence, or proof of the interest transaction. The CIT(A) upheld the disallowance, stating that the interest did not pertain to the business of the assessee. The Tribunal noted the amalgamation of M/s.Everbig Properties & Finvest Pvt Ltd into the assessee company, where the liabilities were transferred. The Tribunal agreed with the Revenue's stand, directing the Assessing Officer to verify the documents provided by the assessee for factual verification.

Issue 2: Disallowance of TDS and Advance Tax claim:

The assessee challenged the CIT(A)'s decision to restore the issue of TDS and Advance Tax claim of Rs. 50,32,183, arguing that the power to 'set aside' was no longer available to the CIT(A) under Section 251(1)(a) post the Finance Act, 2001. The Tribunal found merit in the assessee's argument and decided to restore the issue back to the Assessing Officer for verifying the facts related to the TDS and Advance Tax claim. The appeal was treated as allowed for statistical purposes in relation to these issues.

In conclusion, the Tribunal upheld the disallowance of interest payment to M/s.Gajmukh Investments Private Limited, directing the Assessing Officer to verify the documents provided by the assessee. Additionally, the Tribunal restored the issue of TDS and Advance Tax claim back to the Assessing Officer for further verification, as the power to set aside by the CIT(A) was no longer applicable.

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