Bombay HC: Wife Humiliating Husband in Front of His Friends is Amounts to Cruelty  ||  Delhi HC Interprets Doctrine of “Compelled Self-Publication”,  ||  Del. HC Issues Summons to Campus Sutra in Trademark Infringement Suit Filed by Footwear Brand Campus  ||  Bombay HC Dismisses PIL Seeking Restraining Order against PRADA  ||  Delhi HC: Cannot Bypass Bar on Revision of Interlocutory Order by Invoking Inherent Jurisdiction  ||  Delhi HC: Prosecutrix’s Refusal to Undergo Medical Examination Weakens the Case  ||  Bom. HC: No Provision under JJ Act that Allows Adoption of a Child of Foreign Citizenship  ||  SC Passes Order to Prevent Russian Mother’s Attempt to Flee with Child  ||  SC: Deprivation of Natural Heir from Will May Not Raise Suspicion  ||  SC: Denying Female Heir Right in Property Only Exacerbates Gender Division    

Pr. Commissioner of Income Tax Vs. N.S. Software - (High Court of Delhi) (10 Jul 2023)

Assessee need not to demonstrate commercial expediency in each year concerning a loan transaction

MANU/DE/4379/2023

Direct Taxation

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.

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.

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?

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.

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.

Tags : ASSESSMENT   INTEREST EXPENSES   DISALLOWANCE  

Share :        

Disclaimer | Copyright 2025 - All Rights Reserved