9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2004 (9) TMI 20 - HC - Income TaxInterest on loan/advances - loan granted to the sister concern nexus between the advances and the assessee s overdraft AO viewed that assessee had utilised interest bearing loans to make the advances to the sister concern and ultimately considering this aspect came to the conclusion that interest liability charged to the profit and loss account or to the like after taking a sum of Rs. 10 lakhs pertaining to this advance. Held that it is required to be examined by the Assessing Officer as to what extent the benefit of borrowed funds was granted by way of allowing the advance to the sister concern. It is on that amount that the interest is to be calculated and disallowed. The Assessing Officer will have to calculate the exact time for which the amount was utilised out of the borrowed funds. - we remand the matter to the Assessing Officer
Issues: Remand made by Supreme Court in Civil Appeal, Disallowance of advances made to sister concern, Nexus between advances and assessee's overdraft, Material placed before Income-tax Appellate Tribunal, Decision based on relevant case law, Appeal preferred before High Court, Remand by Supreme Court for fresh disposal, Examination of appeal papers and Tribunal's decision, Need for detailed examination by Assessing Officer, Calculation of interest disallowance, Disposal of appeal.
Issue 1: Remand made by Supreme Court in Civil Appeal The High Court received the case on remand from the Supreme Court in a Civil Appeal. The Supreme Court directed the High Court to consider additional material produced by the appellant, which was found at pages 70-74 of the appeal papers, for a fresh decision. The Supreme Court set aside the High Court's order and remitted the matter back to the High Court for fresh disposal. Issue 2: Disallowance of advances made to sister concern The case involved a disallowance of Rs. 10 lakhs in fresh advances made by the appellant to a sister concern, totaling Rs. 47,67,740. The Assessing Officer raised concerns about the nexus between the advances and the appellant's overdraft, leading to adverse inferences. However, the Income-tax Appellate Tribunal examined the matter and referred to relevant case law, ultimately vacating the disallowance based on the evidence presented. Issue 3: Examination of relevant material and case law The Tribunal examined the case at a macro level and did not delve into the specifics of how the loan amount was utilized by the appellant for the benefit of the sister concern. The Tribunal should have considered whether the loan amount was utilized and to what extent. The Assessing Officer was tasked with calculating the exact time the borrowed funds were used, based on which the interest disallowance would be determined. Issue 4: Detailed examination by Assessing Officer The High Court remanded the matter to the Assessing Officer for a detailed examination. The Assessing Officer was directed to calculate the exact number of days for which the borrowed funds were utilized by the appellant for the benefit of the sister concern. The Assessing Officer was instructed to examine the material presented before the Supreme Court for arriving at a correct conclusion regarding the interest disallowance. Issue 5: Disposal of appeal After the detailed examination by the Assessing Officer, an appropriate order regarding the extent of interest disallowance was to be made. The High Court disposed of the appeal, emphasizing the need for a thorough examination by the Assessing Officer to determine the interest disallowance accurately.
|
