Lawstreet Journal

‘Disallowance under Section 14A of the I. T. Act, 1961 is a notional disallowance, and the amount cannot be added back to book profit under clause (f) of Section 115JB of the Act’: ITAT, Delhi [READ ORDER]

Lawstreet Journal 1 Nov 2021 9:53pm

Image courtesy: Lawstreet Journal Judiciary ‘Disallowance under Section 14A of the I. T. Act, 1961 is a notional disallowance, and the amount cannot be added back to book profit under clause (f) of Section 115JB of the Act’: ITAT, Delhi [READ ORDER]

Recently the Income Tax Appellate Tribunal in New Delhi heard a matter pertaining to the deduction for interest on unpaid purchase price under Section 24 of the Income Tax (IT) Act, 1961. The assessee in the case was Adv. Upvan Gupta, with the Deputy Commissioner of Income Tax (DCIT) New Delhi being the appellant and the M/s Avantha Realty Ltd. being the respondent.

Facts of the Case:

The assessee had acquired property from Ballarpur Industries Ltd. (BIL) in pursuance of the demerger order for a consideration of Rs.140 crores. Owing to the acquisition from BIL, the assessee (ITA Nos. 4360 to 4362/Del/2016 ITA Nos. 6147 & 6148/Del/2017 Avantha Realty Ltd.) has incurred debt of Rs.64,00,00,000/- which was needed to be paid to BIL on account of the property. By way of an agreement between the BIL and the assessee, the assessee paid interest of Rs. 6.4 Crores @ 10% to BIL on the outstanding amount of Rs. 64 Crores.

The unpaid purchase price was treated as borrowed capital by the assessee, and the interest paid thereon was claimed as deduction u/s 24 of the Act under the head “income from house property.” The Assessing Officer disallowed the interest paid by the assessee to BIL on the grounds that the unpaid purchase amount has not been paid even after so many years of transactions in the amalgamation scheme never envisaged the non-payment of purchase price perpetually.

Further, the AO held that this is a convoluted scheme by the assessee to… Continue Reading...


Tagged: Income Tax Appellate Tribunal   Adv Upvan Gupta  
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