Revenue cannot assume the role and occupy a product of a businessman to decide whether the expenditure is reasonable

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Last updated: 05 August 2021
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The Income Tax Appellate Tribunal has ruled that tax authorities cannot assume the role of a businessman to determine the reasonableness of expenditure. The case involved an assessee company that incurred significant interest expenses on a loan taken from a group company, part of which was then lent to another entity at the same interest rate. The tribunal's decision clarifies that the revenue cannot disallow interest expenditure simply because they disagree with the business expediency of the loan's utilisation.

Court :
ITAT Delhi

Brief :
Aggrieved by the order dated 19.03.2018 passed by the Commissioner of Income Tax (Appeals)-6, Delhi ("Ld. CIT(A)") in thecase of M/s Mason Infrastructure Private Limited (“the assessee”), for the assessment year 2013-14, assessee preferred this appeal challenging the confirmation of the disallowance of the interest expenditure on the loan taken by the assessee to the tune of Rs. 1,35,25,521/-.

Citation :
ITA No.-3409/Del/2018

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