Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 917 - HC - Income TaxInterest free loans advanced by the assessee to its subsidiaries - transfer of income without transferring assets u/s. 60 or 61 - CIT (A) and ITAT have recorded concurrent findings of fact that the loans advanced by the assessee to its subsidiaries were not sham transactions or paper transactions, but further, such loans were advanced for reasons of commercial expediency - HELD THAT:- There are findings of fact that the assessee is the holding company and has a deep interest in its subsidiary. Besides, there is material on record that the loans that were advanced to the subsidiaries were not from the borrowed monies. It is also not the case where the assessee had claimed any deductions on the interest paid for borrowing the monies to advance interest-free loans to its subsidiaries. Rather, the material on record suggests that the assessee had reserves of over ₹ 1,000 crores and further, even the subsidiaries, did not derive any interest income as such from out of these interest-free advances received from the assessee. All these circumstances do establish a case of commercial expediency even applying the principles laid down in S.A. Builders (supra). Therefore, based on S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] there is no case made out to interfere with the view taken by the CIT (Appeals) and the ITAT. The assessee, has quite rightly relied on Reliance Communication [2012 (5) TMI 160 - BOMBAY HIGH COURT] which has after considering S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] held that the expression “commercial expediency” is an expression of wide import and includes such expenditure as a prudent businessman incurs for business. An expenditure, which is commercially expedient, may not be incurred under a legal obligation, but so long as it meets the requirement of commercial expediency, it has to be allowed. In the present case, there is not even any allegation that the interest-free loans advanced by the assessee were utilized for the personal benefit of the directors of the sister concern - Decided in favour of assessee.
|