TaxTMI 
TaxTMI 
2019 (10) TMI 918
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..... CIT(A) is wrong and bad in law. 2. That the Ld. CIT(A) erred on facts and in law in confirming the action of the AO of disallowing the amount of interest Rs. 12,28,800/- (12% of Rs. 1,02,40,000) out of interest debited to profit and loss account as per the provisions of section 36(1)(iii) of the Income Tax Act, 1961. 3. That the AO & CIT(A) erred in not appreciating that the amount of Rs. 1,02,40,000/- was given out of the interest free funds available with the company. 4. That the AO & CIT(A) erred in not appreciating that the decision of Hon'ble Punjab and Haryana High Court in the case of Abhishek Industries Ltd. Has been overruled by Hon'ble Supreme Court of India in the case of Munjal Sales Corp. vs. CIT (2008) 298 ITR /168 Tax....
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.... provisions of section 36(1)(iii) of the Act. For purpose of disallowance average rate of interest @ 12% per annum was considered and Rs. 12,28,800/- (@12% of Rs. 10,02,4000/-) was disallowed out of interest debited to the profit and loss account as per the provision of section 36(1)(iii) and added back to the income of the assessee by completing the assessment at Rs. 20,70,830/- u/s. 143(3) of the Act vide order dated 30.11.2016. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 25.9.2018 dismissed the appeal of the assessee. Aggrieved with the impugned order dated 25.9.2018 assessee is in appeal before the Tribunal. 3. At the time of hearing Ld. Counsel for the assessee reiterated th....
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....ase- reg. In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to disallowance u/s 36(1)(iii) on account of interest free loans given to Directors/ Partners or their close relatives: 1. Punjab Stainless Steel Inds. Vs CIT [2011) 196 Taxman 404 (Delhi)/[2010) 324 ITR 396 (Delhi) In this case there was absolutely no finding recorded by Tribunal that interest free advances were made by assessee to sister concern for its business purposes. It was also noticed that advances were extended out of borrowed funds and not out of any credit balance available with assessee-firm. Hon'ble Delhi High Court held that impugned order passed by authorities below was to be upheld. 2. Thukral ....
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....enclosed) Where Hon'ble Madras High Court held that the assessee is not entitled to claim interest expenditure on the borrowed funds which were diverted to non-business objects." 5. I have heard both the parties and perused the records especially the orders of the authorities below alongwith the contention of the rival sides as well as the Paper Book filed containing pages 1-167, as mentioned above and the Written submissions filed by the Ld. DR. I am of the view that the main issue involved in the present appeal is whether the claim of interest expenses debited to the profit and loss account is allowable to the assessee under the Income Tax Act, 1961 as a business expenses u/s. 36(1)(iii) of the Act or not. After going through the wri....