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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> <br /> High Court of Delhi <br /><br /> Assessee need not to demonstrate commercial expediency in each year concerning a loan transaction<br /><br /> MANU/DE/4379/2023 - (10 Jul 2023)<br /><br /> </td> </tr> <tr> <td align="left" valign="top">Pr. Commissioner of Income Tax Vs. N.S. Software</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE"><strong>In facts of present case, the Assessing Officer (AO) concluded that, the disallowance was mandated in view of the fact that the Respondent/Assessee had not been able to demonstrate "commercial expediency". Accordingly, the AO disallowed interest expenses amounting to Rs. 5,16,16,215in proportion to the non-interest bearing advances extended to each of the partners.<br><br> The Respondent/Assessee, being aggrieved by the order, preferred an appeal with the Commissioner of Income Tax (Appeals). CIT(A), via order, reversed the view taken by the AO. The Appellant/revenue carried the matter in appeal to the Income Tax Appellate Tribunal ["Tribunal"]. The Tribunal concurred with the CIT(A) and dismissed the appeal of the Appellant/revenue.<br><br> The moot point which arises for consideration is, does the Respondent/Assessee need to demonstrate commercial expediency in each year concerning a loan transaction which took place in and about AY 2005-06?<br><br> If the loan availed on account of stated commercial expediency, which has, in a sense, received the imprimatur of the Appellant/revenue, when the loan was first taken and several years thereafter, surely, the Respondent/Assessee is not required, once again, to demonstrate commercial expediency in each year. The AO seems to have disregarded this aspect in the AY in issue.<br><br> Second, the interest expenditure is revenue neutral. In case this was to be disallowed in the hands of respondent/assessee i.e., the partnership firm, it would have to be allowed in the hands of the partners. Present Court is not inclined to interfere with the decision of the Tribunal.</strong></td> </tr> <tr> <td align="left" valign="top" ><strong></strong></td> </tr> <tr> <td align="left" valign="top" ><strong>Tags : Assessment, Interest expenses, Disallowance</strong></td> </tr> <tr> <td align="left" valign="top"> </td> </tr> <tr> <!--<td><strong>Source : <a target="_new" href="http://www.manupatrafast.com/">newsroom.manupatra.com</a></strong></td>--> <td align="left" valign="top"><strong>Source : newsroom.manupatra.com</strong></td> </tr> <tr> <td align="left" valign="top"> </td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top"> </td> </tr> </table> </div> </body> </html>