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2014 (2) TMI 1390 - AT - Income TaxCarry forward of Unabsorbed depreciation - treatment to brought forward unabsorbed depreciation claim - HELD THAT:- As decided in PIONEER ASIA PACKING P. LTD. [2007 (11) TMI 285 - MADRAS HIGH COURT] and GENERAL MOTORS INDIA PVT. LTD [2012 (8) TMI 714 - GUJARAT HIGH COURT] by virtue of the provisions of Sec.32 (2), as amended by Finance Act, 2001, unabsorbed depreciation available in the assessment year 1997-98, 1999-00, 2000-01 & 2001-02 could be carried forward and set off during the succeeding years. Accordingly, we hereby hold that in the relevant assessment year, the assessee shall be entitled to set off unabsorbed depreciation carry forward from the earlier years - Assessing Officer is therefore, directed to modify his order accordingly. Thus, this ground raised by the assessee is allowed in its favour. Interest for borrowed funds - Advances to sister concerns - HELD THAT:- Assessee has own funds far exceeding the advance made to its sister concerns. Further the claim of the assessee that it had transferred accumulate losses to its sister concerns has not been looked into by the Ld.AO, need less to mention that in such case disallowance of interest expense on the premises that interest bearing funds have been diverted would be incorrect. However the following decisions rendered by various higher judiciary has held that if the assessee has own funds exceeding the advances made to sister concerns, then interest expenditure cannot be disallowed on the premises that the assessee has diverted interest bearing fund to its sister concerns. Considering the above decisions in the case CIT Vs. Reliance Utilities And Power Ltd.[2009 (1) TMI 4 - BOMBAY HIGH COURT] & in the case CIT Vs. Bharti Televenture Ltd [2011 (1) TMI 326 - DELHI HIGH COURT] which are identical to the facts of the case before us, we are of the opinion that the Ld. Assessing Officer has erred by disallowing the interest expenditure incurred by the assessee on the premises that interest bearing funds have been diverted to the sister concerns. Therefore, we hereby delete the addition made by the Ld. Assessing Officer, which was further confirmed by the Ld. CIT (A) on this issue - Decided in favour of assessee.
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