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2019 (8) TMI 831 - AT - Income TaxAssessment framed u/s 153A r.w.s 143(3) - assessee contended that there was no search in his premises - HELD THAT:- As per the noting in the assessment order, we find that a search and seizure operation u/s 132 was conducted on 23.07.2015. The assessee has challenged the assumption of jurisdiction on the ground that its premises were never searched and, therefore, assessment framed u/s 153A is bad in law. The challenge of jurisdiction was dismissed by the AO as well as by the CIT(A). We find that on identical set of facts, the assessee was assessed for A.Y 2012-13 and in that year, the assessee has not challenged the jurisdiction of the AO u/s 153A for want of search at its premises. Once the assessee has accepted the search and seizure operation and consequent assessment orders in earlier years, the assessee cannot challenge the same for the year under consideration. This ground is, accordingly, dismissed. Disallowance of interest u/s 36(1)(iii) - advance to subsidiary companies for the business exigencies - HELD THAT:- Non-current investments, which were a appearing in A.Y 2014-15 at ₹ 9.53 crores came down to ₹ 6.62 crores in A.Y 2015-16 and ₹ 3.91 crores in A.Y 2016-17. This, in addition to interest free funds available with the assessee in the form of share capital and reserves and surplus is sufficient for making interest free funds in subsidiary companies. In our considered opinion, looking after the business exigencies of the subsidiary companies is also a primary responsibility of the holding company. In the case of Hero Cycles [2015 (11) TMI 1314 - SUPREME COURT] has held that advance given to a subsidiary company on business expediency establishes the nexus between expenditure and the purpose of business and, therefore, interest paid on borrowed money cannot be disallowed. The Hon'ble Supreme Court in the case of Reliance Industries [2019 (1) TMI 757 - SUPREME COURT ] has held that where interest free funds were available to the assessee which were sufficient to meet the investments in subsidiary companies, interest u/s 36(1)(iii) cannot be disallowed. There is no finding by the AO that the subsidiary companies have not utilised the borrowed money for their respective businesses. In fact, in earlier A.Ys, i.e. A.Y 2013-14, assessment was framed u/s 153A r.w.s 143(3) and no such disallowance was made by the AO. Considering the facts in totality and also the past history of the assessee, we set aside the findings of the CIT(A) and direct the AO to delete the disallowance of interest u/s 36(1)(iii). This ground raised by the assessee in both the appeals is allowed.
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