This document examines the tax appeal filed by Reed & Pick Impex (P) Ltd. against the Income Tax Officer, Ward-5, Panipat concerning the assessment year 2015-16. The primary contention revolves around the disputed deductions for interest payments and claims on various expenses which were partly disallowed by the assessing officer.
The case, heard by the Delhi Bench ‘SMC’ of the Income Tax Appellate Tribunal, addresses the appellant’s objections against the order of the CIT(A), Karnal. The appellant challenges the partial disallowance of interest deductions amounting to Rs. 287,000 and other operational expenses which the Assessing Officer adjusted against the company’s declared income.
The appellant’s return was scrutinized under section 143(3) read with section 147 of the Income Tax Act, where discrepancies were noted in the claimed interest deductions on loans and advances made to related parties. Furthermore, expense claims related to travel, telephone, and other operational activities were scrutinized, with a portion deemed non-business related and thereby disallowed.
The Tribunal’s examination focused on the proper application of sections 36(1)(iii) for interest deductions and the rationale behind the expense disallowances. The decision hinged on the verification of the utilization of borrowed funds and the justification of expenses as wholly for business purposes.
The document concludes with the Tribunal’s decision to uphold the CIT(A)’s order with specific adjustments to the quantum of disallowed expenses, emphasizing the need for clear documentation and justification of business expenses to avoid similar disputes.
Analysis of ITA No. 94/DEL/2019: Reed & Pick Impex (P) Ltd. vs. ITO, Ward-5, Panipat
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