TaxTMI 
TaxTMI 
2020 (11) TMI 603
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.... director of the assessee company has filed an affidavit explaining the reasons for the delay stating that due to official trip, he could not sign the appeal and on his return from official trip, it was signed and filed. Though the particulars of official trip and other details have not been furnished, keeping in mind the principle that substantive rights should not be denied on technicalities, we condone the delay in filing the appeal. 3. Coming to the appeal, the first issue that needs adjudication is as to, whether the revenue authorities were justified in disallowing the claim of assessee for deduction on account of interest paid on borrowed funds u/s. 36(1)(iii) of the Income-tax Act, 1961 [the Act]. 4. The assessee is a company enga....
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.... and if in the earlier assessment year those advances were considered as for the purpose of business, then a different view cannot be taken for the current assessment year. The assessee therefore submitted that disallowance of interest should be deleted. The CIT(Appeals), however, rejected the plea of assessee, holding that interest can be allowed as a deduction only when interest-free advances were owing to commercial expediency and since such commercial expediency was absent in the case of assessee, the same was rightly disallowed by the AO. With regard to the decision of the Hon'ble High Court of Karnataka in the case of Sridev Enterprises (supra), the CIT(Appeals) took the view that there is nothing brought on record to show that openin....
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....een diverted interest-free to the sister concern. 8. In ITA.Nos.569/2015 & 229/2016 in the case of The Commissioner of Income-tax, CIT (A) and Another -Vs.- M/s. Chaitanya Properties Pvt. Ltd., order dated 15.6.2018 the Hon'ble Karnataka High Court held as follows:- "4. The said controversy with regard to Section 14-A read with Rule 8D of the Rules has been decided by this Court in the following two judgments which are quoted below for ready reference. (i) Commissioner of Income Tax & Anr. Vs. Microlabs Ltd., [2016] 383 ITR 490 (Karn). "39. Aggrieved by the order of CIT(A), the assessee has raised ground No.2. 40. We have heard the rival submissions. A copy of the availability of funds and investments made was filed before us which....
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....o not find any substantial question of law would arise for consideration as canvassed. 6. In view of the above observations, the appeal is dismissed." 9. In light of the law as explained by the Hon'ble jurisdictional High Court in Chaitanya Properties Pvt.Ltd. (supra) and in the light of admitted factual position that own funds were much more than the borrowed funds, we are of the view that disallowance of interest expenditure cannot be sustained and the same is directed to be deleted. The first issue is accordingly decided in favour of the assessee. 10. The second issue that arises for consideration in this appeal is as to, whether revenue authorities were justified in making an addition of Rs. 8,15,000 on the ground that assessee had ....