TMI Blog2008 (11) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... ils: ------------------------------------------ V.No. Date Cheque No. Amount ------------------------------------------ BP-1063 29-09-2004 318027 50.00 ------------------------------------------ BP-1063 29-09-2004 318028 50.00 ------------------------------------------ BP-1063 29-09-2004 318029 50.00 ------------------------------------------ BP-1063 29-09-2004 318030 50.00 ------------------------------------------ BP-1063 29-09-2004 318032 17.00 ------------------------------------------ BP-1063 29-09-2004 50.00 ------------------------------------------ BP-1230 30-10-2004 50.00 ------------------------------------------ BP-665 11-03-2005 145472 30.00 ------------------------------------------ Total 347.00 ------------------------------------------ 3. On the basis of the aforesaid facts, the AO concluded that appellant had diverted interest bearing loans for non-business purposes as it had charged no interest on the loans given to its subsidiary M/s Haryana Telecom Ltd., Rohtak. He thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest has been made without appreciating the facts and circumstances of the case and provisions of law. It was further submitted that, in the instant case, advances to a subsidiary company had been made on account of commercial expediency and that too, under obligation in terms of the rehabilitation scheme sanctioned by BIFR. A copy of the scheme has been placed in the paper book. It was further submitted that, the Hon'ble apex Court has held that, if the funds have been made to a subsidiary company on account of commercial expediency, no disallowance of interest can be made. It was further submitted that, the judgment of Hon'ble Punjab Haryana High Court in the case of the appellant was for asst. yrs. 1991-92, 1992-93, 1995-96 and 1996-97 whereas in the instant case, payments have been made only in the instant year and the claim in question is not in respect of the funds advanced in those years. It was submitted that, judgment relied upon by the Hon'ble Punjab Haryana High Court in the case of CIT vs. Abhishek Industries Ltd. (2006) 205 CTR (P H) 304 : (2006) 286 ITR 1 (P H) stands indirectly overruled by the apex Court in the case of S.A. Builders. Reliance was also plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the assessee to its subsidiary company, namely M/s Haryana Telecom Ltd., as per the scheme for rehabilitation sanctioned by the BIFR Obviously, the appellant can be said to have a deep interest in the rehabilitation of the business of the subsidiary company. Ostensibly, the funds have been put to use by the subsidiary for its business. It is thus a case where funds have been advanced by the assessee to its subsidiary company on grounds of commercial expediency. In somewhat similar situation, apex Court in S.A. Builders observed as under: "We wish to make it clear that it is not our opinion that in every case interest on borrowed loan has to be allowed if the assessee advances it to a sister concern. It all depends on the facts and circumstances of the respective case. For instance, if the directors of the sister concern utilize the amount advanced to it by the assessee for their personal benefit, obviously it cannot be said that such money was advanced as a measure of commercial expediency. However, money can be said to be advanced to a sister concern for commercial expediency in many other circumstances (which need not be enumerated here). However, where it is obviou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We are of the respectful opinion that, judgments of jurisdictional High Court in the case of the appellant for asst. yrs. 1991-92, 1992-93, 1993-94 and 1996-97 are no doubt binding but only when the facts of the case of the appellant in the instant year and, those years are identical. In the present case, it is undisputed that the money has been advanced by the assessee company under a sanctioned scheme of BIFR and it is a case where money had been advanced on the ground of commercial expediency. It is not a case and nor it can be held that, the money had been advanced by the assessee for non-business purposes. In fact, there is no such finding either by AO or CIT(A) so as to enable us to conclude that money had been diverted for non-business purposes. On the contrary, mechanical reliance on the judgment of the Hon'ble jurisdictional High Court is also not a correct way of following the judgment. A gainful reference can be made to the judgment of the Hon'ble Punjab Haryana High Court in the case of the appellant for asst. yr. 1995-96 [reported as CIT vs. Industrial Cables (India) Ltd. (2007) 209 CTR (P H) 167-Ed.], wherein the judgment of the Hon'ble Punjab Haryana High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sick company under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 vide order of BIFR dt. 28th June, 1999. It has been further noted that, in such order, BIFR has directed CBDT/Director of IT (Revenue) to consider to exempt/grant relief from application of provisions of s. 41 (1) of the Act. The application filed by the appellant before CBDT/Director of IT (Revenue) is still pending. In light of the pendency of the application, the CIT(A) held that it is clear that waiver of interest by the banks and waiver of interest on debentures to the extent of Rs. 1,87,78,000 and Rs. 92,14,000 respectively is covered by the provisions of s. 41(1) of the Act and the assessee's application for implementation of the order is pending, therefore, no relief is entitled till the disposal of the application. The learned counsel for the assessee did not dispute the applicability of provisions of s. 41(1) of the Act. All what he submits is that Director of IT (Revenue) may kindly be directed to dispose of the application at an earliest. 15. We have considered the facts of the case and perused the submissions. We are not in agreement with the contention of the counsel of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
