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2021 (6) TMI 299 - HC - Income TaxDisallowance of expenditure - assessee had failed to prove that the said expenditure has been incurred by assessee and not in the hands of M/s. VGPL - HELD THAT:- Interest which was incurred was utilized for providing financial assistance to its wholly owned subsidiary of the assessee on account of commercial expediency and the financial assistance was utilized by the wholly owned subsidiary company for its power generating business. In terms of the agreement dated 11.01.2007, interest on the financial assistance given to the wholly owned subsidiary was payable to the assessee from first quarter calendar year 2011 and the same was received. CIT (Appeals) as well as the tribunal have rightly treated the payment of interest by placing reliance on the decision of 'S.A. BUILDERS VS. CIT (Appeals), CHANDIGARH', [2006 (12) TMI 82 - SUPREME COURT] - The aforesaid finding, which is concurrent in nature does not suffer from any infirmity and cannot be said to be perverse. Therefore, the first substantial question of law is answered against the revenue and in favour of the assessee. Disallowance u/s 14A - HELD THAT:- CIT (Appeals) has negatived the submission of the assessee and has directed the AO to re-work the disallowance. The aforesaid order has been affirmed in appeal by the tribunal. Therefore, it is not necessary to answer the second substantial question of law. Disallowance of interest expenditure relating to investment made by the assessee - HELD THAT:- CIT (Appeals) after taking into account the details furnished by the assessee, has recorded the finding that there is a nexus between the loan and the business of the assessee and there is no nexus between interest bearing funds and the investment made in the sister concern of the assessee. The finding recorded by the CIT (Appeals) that investments are presumed to be made out of surplus funds and the borrowed funds have not been diverted for the purpose of providing interest free financial assistance to its sister concerns has been upheld. The aforesaid concurrent finding of fact does not suffer from any infirmity and cannot be termed as perverse. Third substantial question of law is therefore, answered in the negative and against the revenue.
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