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2014 (3) TMI 183 - GUJARAT HIGH COURTDeletion of interest expenses u/s 37 of the Act - Inter corporate deposits - Divergence between interest bearing borrowings funds to noninterest bearing ICDs - Whether the ITAT has erred in confirming the order of CIT (A) deleting the addition out of interest expenses on Inter Corporate Deposits – Held that:- The appellant had proved before the AO that financial position of both the sister concern to whom advances were given - The Tribunal uphold the Commissioner’s exercise of revisional powers – the Tribunal did not examine the contentious issues touched by the Commissioner in revisional order - The Tribunal only satisfied itself that the grounds for taking the order of Assessing Officer under revision exist – thus, the Tribunal in its own order later on examining the additions on merits cannot be found fault with. CIT (A) as well as Tribunal both noted that Sunrise Fincap Limited ie., the creditor had negative growth - The income of the company was reducing day by day and the company had no concrete business plan - Both the sides have agreed that the assessee would forgo the interest, if the principal amount of Rs. 1.5 Crores is paid by the company before the specified date - the company had incurred losses - The company was not in a good condition to repay the principal and even interest and had become sick - The appellant had therefore no reason to charge interest from these two companies - It was on this count that the CIT (A) as well as Tribunal both deleted the additions on the principal and charging tax on real income – there was no reason to take a different view - the assessee company had accumulated business loss which were being carried forward in future years – Decided against Revenue.
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