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2015 (6) TMI 760 - AT - Income TaxDisallowances of interest expenses - assessee has running account with the sister concern - Held that:- As far as Assessment Year 2007-08 is concerned, assessee has liquidated its investment of ₹ 100 crore, therefore, a sum of ₹ 100 crore was available with the assessee. During the course of hearing, we have confronted the ld. counsel to show that on liquidation of investment, assessee had realized 100 crore. Because, if the value of shares was diminished on account of fluctuation in market, then how credit of ₹ 100 crore can be given for quantifying the interest free funds with the assessee. Ld. counsel showed us the realization of the investment at ₹ 100 crore accounted in the accounts. Similarly, it has reserve and surplus of ₹ 165 crore. If ₹ 24 crore taken out from this which was added on account of revaluation in the last year, then, the sum at ₹ 141 crore will be available to the assessee. If the investment realized by the assessee out of liquidation of ₹ 100 crore in the shares is added with interest free funds at ₹ 141 crore, then, assessee has the funds of ₹ 241 crore. It has given interest free advances of ₹ 153.52 crore only. It has demonstrated that it has more interest free fund than the one given to the sister concern. There is no dispute on facts between both the Assessment Years. Therefore, considering the discussion in Assessment Year 2006- 07, no disallowance is sustainable in this year also. These grounds of appeals are allowed and disallowance at ₹ 44,65,790/- as well as ₹ 46,76,672/- in Assessment Year 2006-07 and 2007-08 are deleted. - Decided partly in favour of assessee.
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