Income Tax: ITAT deletes Disallowance on Finance Charges [Read Order]

ITAT - disallowance - finance charges - Taxscan

The Income Tax Appellate Tribunal (ITAT), Hyderabad bench deleted the disallowance in respect of the finance charges.

The assessee, BP Ferrium Industries Private Limited assailed the order of the lower authorities’ action disallowing the finance charges of Rs.1,81,07,126/-.

The AO has made out the case that the assessee is not conducting any trading activity and hence, the financial charges of Rs.1,81,07,126/- debited to the profit & loss account are disallowed.

The CIT(A) held that no transaction in purchase and sale has taken place. This being the position, the question of payment of financial charges of Rs.1,81,07,126/- cannot be treated as incidental to the business of the assessee. Therefore, the action of the AO is justified in disallowing Rs.1,81,07,126/- claimed out of the business expenditure.

The Coram of Laxmi Prasad Sahu and S.S.Godara found no merit in Revenue’s foregoing arguments challenging lack of bonafide on assessee’s part in raising the impugned finance charges to claim.

The ITAT found no reason to adopt a different approach in instant is raising the very aspect of suspicious circumstances. The CIT(A)’s action affirming the impugned finance charges disallowance stands reversed, therefore.

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