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2016 (10) TMI 530 - AT - Income TaxAddition of principal amount of loan waived by the lender on account of one time settlement of loan - Held that:- CIT (A) has considered the depth of the stand taken by the assessee and the facts of the case and has rightly come to the conclusion that the said loan was taken for the purpose of long term investments and the learned CIT (A) has also taken note of the decisions of the Hon’ble jurisdictional High Court rendered in the case of (i) Solid Containers Ltd. Vs. DCIT [2008 (8) TMI 156 - BOMBAY HIGH COURT ] and (ii) Mahindra & Mahindra Ltd. Vs. CIT [2003 (1) TMI 71 - BOMBAY High Court ] and the learned CIT (A) after considering the submissions recorded from Para 4.1 to 4.12 of his order has rightly come to the conclusion that the AO was not correct in taxing the aforesaid waiver of loan by treating the same as revenue receipt. No new material has been brought on record by the revenue to rebut/controvert the findings of the learned CIT (A). Disallowance of interest - Held that:- In the absence of any valid explanation/evidence supporting the assessee’s claim, the learned CIT (A) has rightly confirmed the action of the AO The learned CIT (A) while reaching to this conclusion has also appreciated the detailed submission of the assessee wherein it has been specifically recorded that the loan amount has been advanced to the assessee’s sister concerns can be treated as investment made with deposit with the sister concerns. Since, it is not the business activity of the assessee Company as can be seen from the records that this can be invested in the market. It has also been noted by the learned CIT (A) that the assessee was not in a position to adduce any evidence to prove that the business prospect of the assessee are inseparably linked with its sister concerns. Therefore, while rightly appreciating the order of the AO, the learned CIT (A) has confirmed the action of the AO in disallowing the interest expenses because the assessee has advanced interest-free loans to its subsidiaries without showing that there was any business exigency for the same. In view of this, we find no reason to interfere with the findings of the learned CIT (A).
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