Chanchal Buildcon Vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee, Chanchal Buildcon, had filed its return of income for the Assessment Year (A.Y.) 2018-19 declaring total income of Rs.18,53,600/-. The case was selected for scrutiny under CASS. The assessee is engaged in the business of real estate development and construction. The Assessing Officer (AO) had required the assessee to explain the interest expense debited to P&L account and the negative capital of the partners. The AO had disallowed the interest expense of the assessee to the tune of Rs. 1,00,91,424/- being 12% of partner's capital withdrawal of Rs. 8,40,95,200/-. The assessment was completed u/s. 143(3) of the Act on 09.08.2021 at total income of Rs. 1,19,88,380/-. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)), which was dismissed. The assessee then filed a second appeal before the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the disallowance of interest expenses to the tune of Rs. 1,00,91,424/- u/s 36(1)(iii) r.w.s 37 of the Act was justified?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

Similar Judgements

• Om Sri Maa Shakti Naman Vs. Asst. CIT Circle -32(2)

  Mumbai bench

• Mahendra Patel Builders P Ltd vs. The DCIT, Cent.Cir.2, Vadodara

  Ahmedabad bench

• Kedar Shashank Ranade vs. ACIT, Circle – 2, Pune

  Pune bench

• Manohars Catering and / or The Partners/ Legal Representatives of the Partners of Manohars Catering as Stipulated u/s 189(1), 189(3) & 189(4) of the 1961 Act v. Assistant Commissioner of Income-tax, Circle-1, Bangalore

  Bangalore bench

• Rishi F.L. On Shop vs Income Tax Officer

  Kolkata bench

• Dharmanandan Developers vs. Income Tax Officer

  Ahmedabad bench