COMMISSIONER OF INCOME TAX Vs. INDO KOPP LTD.

JUDGEMENT

(1.) THE AO noticed that the assessee had paid an amount of Rs. 16,23,432 towards interest to its trade creditors, regarding which it had claimed a deduction that was disallowed on the ground that the assessee had not recovered interest from its debtors one of whom happened to be its own sister concern. The Tribunal has by the impugned order reversed that view. It has in our opinion, correctly held that there was no direct linkage between interest which the assessee was paying to its creditors and the debts which it had to recover from other parties including its sister concern. The consideration for paying interest to trade creditors and for not charging interest from the trade debtors could indeed be different and could not be mixed up for purpose of denying to the assessee a deduction otherwise due in law. The Tribunal has observed as follows :

(2.) THERE is in our view, no legal infirmity or perversity in the view taken by the Tribunal. Just because the respondent/assessee had not charged interest from its trade debtors did not mean that interest paid by it to its trade creditors should not be allowed as a deduction especially when there is no dispute about the genuineness of the payment made by the assessee.

(3.) NO substantial question of law arises for our consideration in this appeal which fails and is hereby dismissed.