Tribunal partially allows appeal on undisclosed TDS & interest disallowance

The appeal against the order of CIT(A)-43, New Delhi was partially allowed by the Tribunal. The addition of income related to undisclosed TDS was deemed unsustainable for a specific party due to discrepancies in reconciliation. Disallowance of interest on interest-free loans to subsidiary companies was partially allowed, with the Tribunal directing the AO to recompute disallowance based on specific rates for each advance, considering the availability of interest-free funds. The Tribunal provided detailed reasoning for each issue raised by the assessee in the judgment pronounced on 14th June, 2023.

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Issues Involved:
The appeal against the order of CIT(A)-43, New Delhi was filed with a delay of 18 days due to personal reasons. The issues involved include the addition of income related to undisclosed TDS, disallowance of interest on interest-free loans to subsidiary companies, and disallowance under section 14A.

Issue 1 - Addition of Income related to Undisclosed TDS:
The appeal pertained to the addition of Rs. 12,55,138/- on account of a difference in income offered by the assessee and entries in the ITS statement. The assessee submitted details to reconcile the undisclosed TDS, but discrepancies were found in the reconciliation for certain parties. The Tribunal observed that when a fact is denied specifically on affidavit before tax authorities, the claim should be believed. Thus, the addition related to a specific party was deemed unsustainable. Regarding another party, the Tribunal allowed a partial benefit to the assessee by restricting the addition based on the nature of the transaction.

Issue 2 - Disallowance of Interest on Interest-Free Loans:
The disallowance of Rs. 71,36,000/- out of interest paid on loans given to subsidiary companies was challenged. The CIT(A) considered the interest-free funds available with the assessee and the interest-bearing funds. It was observed that the disallowance rate of 16% was not appropriate given the varying interest rates on loans. The Tribunal agreed with the assessee's submissions and directed the AO to recompute the disallowance based on specific rates for each advance. The Tribunal found that the assessee had sufficient interest-free funds to support the interest-free advances, leading to a partial allowance of the appeal.

Separate Judgement by Anubhav Sharma, JM:
The Tribunal, comprising Sh. N.K.Billaiya, Accountant Member, and Sh. Anubhav Sharma, Judicial Member, pronounced the order on 14th June, 2023, allowing the appeal partly and providing detailed reasoning for each issue raised by the assessee.

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