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2015 (2) TMI 167 - AT - Income TaxProvision for payment made on behalf of subsidiary company claimed as expense - assessee had a fully owned subsidiary company styled as “Gujarat Narmada Auto Limited” which was engaged in the manufacture of two/ three wheelers - CIT(A) allowed the claim - Held that:- Even if the version of the CIT(A) taken as correct, then also, the loss being crystallized on 3.3.1997, the same was in the Asstt.Year 1997-98 and not during the assessment year under consideration i.e. Asstt.Year 1998-99. Therefore, the CIT(A) was not justified in deleting the disallowance on the above count. Further, no material was brought on before us to show that the assessee’s liability to make payment of ₹ 3.50 crores was crystallized during the under consideration and that no part of the payments were also made during the year under consideration. Therefore, in our considered view, the CIT(A) was not justified in deleting the disallowance made by the AO. We, therefore, set aside the order of the CIT(A) in respect of the issue under consideration and restore back the order of the AO. - Decided in favour of revenue. Disallowance of interest on interest free loans / advances given by the assessee to its subsidiaries and associate concerns - Held that:- AO has disallowed interest expenditure on advances given to the sister concern on the ground that the borrowed funds were utilized for business purpose by the assessee by advancing the interest free advance to the sister concerns. On appeal the CIT(A) had deleted the disallowance by following his order for Asstt.Year 2007-08. We find that the order of the CIT(A) for Asstt.Year 1997-98 was appealed by the Revenue, and the Tribunal confirmed the order of the CIT(A) deleting the disallowance of interest expenditure. No distinguishing features could be pointed out by the DR. It is also observed that in the years under appeal also, advances were given to the same parties. Thus, the facts being identical, respectfully following the precedents, we confirm the order of the CIT(A), and the grounds of the appeal of the Revenue in all the years under appeal are dismissed. - Decided in favour of assessee.
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