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2016 (11) TMI 1123 - AT - Income TaxDisallowance of notional interest - interest free loan given to wholly owned subsidiaries - Held that:- CIT(A) was of the correct view that the Assessing Officer has wrongly declined the interest on the interest free loan to APIC Ltd. for the A.Y.2001-02, 2002-03 and 2005-06 because the said loan was for the business purpose. Similarly the assessee company advanced interest free loan of ₹ 100,02,00,000/- to TIMI Ltd. so as to enable it to liquidate loans it had taken from its old shareholders. M/s. TIMI Ltd. was the owner of assessee’s corporate office and assessee had taken the office on rent. Assessee charged interest up to 10.09.2001, the date when TIMI Ltd. became its subsidiary to meet with the requirements of RBI regulations and when TIMI Ltd. became its subsidiary it stopped charging interest. The Assessing Officer disallowed the interest on account of interest free loan given to TIMI Ltd. to the tune of ₹ 10,00,20,000/- but the CIT(A) has allowed the same in view of the law settled by the Mumbai High Court in case CIT Vs. Reliance Utilities and Power Ltd.[2009 (1) TMI 4 - BOMBAY HIGH COURT ] and Supreme Court in the case of S.A.Builders Ltd. V/s. CIT [2006 (12) TMI 82 - SUPREME COURT ] and Hero Cycles P. Ltd. Vs. Commissioner of Income Tax [2015 (11) TMI 1314 - SUPREME COURT OF INDIA]- Decided in favour of assessee Disallowance on property tax - non running business - Held that:- It is not in dispute that the assessee company can purchase the property for the business purpose. The important documents has been filed by the assessee company which lies at page 25 of the paper book in which the lesser MIDC has leased out the land to the lessee M/s. Asian Paints Ltd. and in view of the said receipt the assessee paid an amount of ₹ 60,87,581/- and assessee paid property tax to the tune of ₹ 60,87,581/- during the relevant assessment year which has been declined on the ground of that the assessee did not do the business. The receipt lies at page 25 of the paper book also speaks about the purpose in which the purpose has been written for factory. Moreover, the allotted land was in nature of industrial land in MIDC area, Turbhe, Navi Mumbai. It is not a case where new factory has been established by the assessee. The company of the assessee is old and acquired the industrial plot whose money, only property tax has been paid to the tune of ₹ 60,87,581/-. It is not necessary that after acquiring the right upon industrial plot the assessee should immediately construct the building and to start any another unit collateral to his object. The companies are working in accordance with its object. The incorporation date of the company is 29.12.1955. Thus Assessing Officer is hereby directed to allow the property tax for the relevant assessment year - Decided in favour of assessee
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