Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 323 - HC - Income TaxAddition for not charging of interest on loans and advances given to Directors and Subsidiaries - whether ITAT was right in law in applying the ratio of this Hon'ble Court in the case of CIT Vs. Abhishek Industries [2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT] when no diversion of interest bearing funds had been made to Shri A.S.Bhatia? - HELD THAT:- Interest liability of the assessee towards the bank on the borrowing which was taken by the assessee had no bearing because the assessee had sufficient funds of its own which the assessee could have advanced and it was for the AO to establish a nexus between the borrowing and advancing to prove that expenditure was for non-business purposes. With respect to the loan given to the Directors, the assessee had claimed deduction of interest which was allowed by the Hon'ble Supreme Court. With this observation, the Hon'ble Supreme Court allowed the appeal and the judgment of the High Court in Commissioner of Income Tax-I, Ludhiana vs. M/s. Abhishek Industries Limited, Ludhiana [2006 (8) TMI 123 - PUNJAB AND HARYANA HIGH COURT] was over-ruled. As regards amount given to the sister concern, the issue in the present case does not need to be examined as even in the present case, the issue with respect to money given to the sister concern-Punjab Biotechnology Plant Ltd. has already attained finality in Hero Cycles 's case [2015 (11) TMI 1314 - SUPREME COURT] With respect to loan given to Shri A.S. Bhatia, the issue has been considered by the Hon'ble Supreme Court in Hero Cycles 's case [2015 (11) TMI 1314 - SUPREME COURT] as loan of Rs.34 lacs was given to the Directors when the credit balance was Rs.15 crores and this amount did not effect the business transaction carried out by the company after taking loan from the bank. The question of liability has already been answered in favour of the assessee by the Supreme Court in Hero Cycles's case (supra) wherein the judgment passed in ‘Abhishek Industries’ (supra) has been overrurled. The judgment of Hero Cycles's case (supra) has, thereafter, been followed by this Court in Principal Commission of Income Tax vs. Holy Faith International (P) Ltd, [2017 (8) TMI 185 - PUNJAB AND HARYANA HIGH COURT] decided benefit of interest was allowed under Section 36(1)(iii) - Decided in favour of assessee.
|