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आयकर अपीलीय अिधकरण इंदौर (cid:586)ायपीठ इंदौर

IN THE INCOME TAX APPELLATE TRIBUNAL

INDORE BENCH, INDORE

BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER

AND

SHRI PARESH M. JOSHI, JUDICIAL MEMBER

ITA No.335/ Ind/ 2025

Assessment Year:2015-16

Shahanshah Dal Mill, ITO -5(3)

GDM-90, Krishi Upaj Bhopal

/

बनाम

Mandi, Karond,

Vs.

Bhopal

(Assessee/ Appellant) (Revenue/ Respondent)

PAN: ACSFS1095H

Assessee by Shri Manoj Fadnis, AR

Revenue by Shri Ashish Porwal, Sr. DR

Date of Hearing 12.02.2026

Date of Pronouncement 27/ 02/ 2026

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by order of first-appeal dated 30.01.2023 passed by

learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which

in turn arises out of assessment-order dated 25.09.2017 passed by learned

ITO-5(3), Bhopal [“AO”] u/ s 147 r.w.s. 143(3) of Income-tax Act, 1961 [“the

Act”] for Assessment-Year [“AY”] 2015-16, the assessee has filed this appeal

on following grounds:

“1. That the Ld. AO erred in law and on facts in making an addition of Rs.

4,33,857/ - to thetotal returned income of theappellant.

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ITA No. 335/Ind/2025 - AY 2015-16

2. That the Ld. AO erred on facts and in law in making a disallowance of Rs.

4,33,857/ -being interest paid pertains to period up to 14.06.2014, ignoring

the explanation and circumstances in which such payments were made and

alsoignoring thegenuineness of such transactions.

3. That the appellant reserves the right to add, alter or amend the grounds of

appeal before the appeal is decided.”

2. The background facts leading to present appeal are as under:

(i) The assessee “M/ s Shahanshah Dal Mill” is a partnership firm. For

AY 2015-16 under consideration, the assessee filed return declaring a

total income of Rs. 30,690/ -. The case of assessee was selected for

limited scrutiny to examine the payments made to related persons u/ s

40A(2)(b) and claim of high interest expenditure. The AO issued

notices u/ s 143(2)/ 142(1) which were complied by assessee. During

assessment-proceeding, the AO found that the assessee-firm came

into existence w.e.f. 15.06.2014. Originally, a proprietorship concern

with same name of “M/ s Shahanshah Dal Mill” was owned and

carried by “Shri Somamal Waswani”. However, “Shri Somamal

Waswani” expired on 14.06.2014 and in terms of will executed by him,

his son “Shri Shyam Sundar Waswani” became owner of

proprietorship concern. However, “Shri Shyam Sunder Waswani”

converted proprietorship concern into a partnership firm w.e.f.

15.06.2014 by adding his wife and son. Thus, the present assessee-

firm came into existence from 15.06.2014.

(ii) During assessment-proceedings, the AO issued a show-cause notice

dated 12.09.2017 and raised following query among others:

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ITA No. 335/Ind/2025 - AY 2015-16

“3. All the expenses have been claimed by you in the account of firm after

15.06.14, but you have claimed interest of Rs 21,11,436/ - on unsecured loan

received from various 9 parties for the period of 01.04.14 to 31.03.15. Hence,

the amount of interest up to the period of 14.06.14 that comes to Rs

4,33,857/ - (21,11,436*75/ 365), is liable to bedisallowed and proposed to be

added in your income. Please Explain.”

(iii) The assessee filed following reply to the query raised by AO:

“3. In reference to this we hereby submit that no interest has been paid in

respect to earlier period of the year under consideration i.e. from “1st April

2014 - 16 June 2014”. Rate of Interest has been increases after firm was

established and consequently rate has been proportionally taken on the

basis of number of days for which Interest has been paid. Interest to the firm

cannot be disallowed for the reason that interest has not been paid in the

earlier period.

Further, whatever Interest was debited in profit and loss account was

actually paid and interest was offered by the recipient for tax. Even if the

rate of interest may not be 12%on calculation yet the interest payment made

by the assessee was income in hands of recipie