9911796707
TMI Blog2014 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent : Sri A. V. Krishna Koundinya JUDGMENT (Per Justice L. Narasimha Reddy) The respondent is a private limited company and is assessed to tax. For the assessment years 1992-93 it claimed the deduction of the component of interest on the loans borrowed for its business. The assessing officer disallowed the deduction on the ground that the respondent lent and advanced substantial a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot for the purpose of its business. He contends that non-levy of interest on the amount advanced by the respondent to its sister concern is nothing but a camouflage to pass on the amount borrowed by it to its sister concern and in that view of the matter, it cannot be said that the amount was, in fact, borrowed for the benefit of its sister concern itself and thereby the respondent is not entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent borrowed certain amounts from a financial institution and claimed the deduction of interest paid thereon. The assessing officer did not dispute the factum of borrowing of loan or the liability to pay interest. However, he refused to permit deduction on the ground that the respondent has advanced substantial amount to its sister concern without levying interest. From that fact, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be the same. It is not uncommon that even where an entrepreneur is possessed of resources to establish a business undertaking, borrowing of the amount for that very purpose may prove to be beneficial to him. The benefits include subsidy or waiver of interest depending on the nature of the activity and the schemes that are in force at the relevant point of time. Once it emerges that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
