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The ITAT held that the assessee's transactions did not fall within the provisions of speculative transactions u/s 43(5) as the ultimate settlement was through actual delivery to the buyer. Disallowance of interest u/s 36(1)(iii) was rejected as the advance to parties was for business purposes, not necessarily bearing interest, and supported by audited balance sheet reflecting availability of interest-free funds. The decision aligned with the precedent set by the Supreme Court in Reliance Industries Ltd, leading to deletion of the addition u/s 36(1)(iii) in favor of the assessee.
The ITAT held that the assessee's transactions did not fall within the provisions of speculative transactions u/s 43(5) as the ultimate settlement was through actual delivery to the buyer. Disallowance of interest u/s 36(1)(iii) was rejected as the advance to parties was for business purposes, not necessarily bearing interest, and supported by audited balance sheet reflecting availability of interest-free funds. The decision aligned with the precedent set by the Supreme Court in Reliance Industries Ltd, leading to deletion of the addition u/s 36(1)(iii) in favor of the assessee.
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