TMI Blog2015 (2) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... its employees welfare trust is continued even during the year under consideration. If this factual position is found to be correct on such verification, the AO shall delete the disallowance made on account of interest for both the years under consideration. - Decided in favour of assessee for statistical purposes. - ITA No. 581/Hyd/2014, ITA No. 656 & 1142/Hyd/2014 - - - Dated:- 31-12-2014 - Shri P. M. Jagtap And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Shri K.C. Devdas, CA For the Respondent : Shri D. Sudhakar Rao, CIT (DR) ORDER Per P. M. Jagtap, A. M. Out of these three appeals, two appeals being ITA No.581 and 656/Hyd/2014 are cross appeals for A.Y 2009-10 which are directed against the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation was offered by the assessee: (i) The Company has given interest free loan to SKS Microfinance Employees Welfare Trust (Trust) under the ESPS.The Trust has been established exclusively for the benefit of the employees of the company. (ii) The Trust provides financial assistance to employees to enable them to purchase shares of the company under the Employees Share Purchase Scheme. (iii) It is to be noted that the employees of the company are the sole beneficiaries of the Trust and no other. (iv) Based on the above, such interest free loans are advances solely for the benefit of the employees of the companies and hence such expense should be regarded as having been incurred solely and exclusively for business purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot look at the matter from their own point of view but that of a prudent businessman Further, reliance is placed on the decision of Hon'ble Supreme Court in the case of S.A. Builders Ltd vs. CIT (A) and ANR (2007) (288 ITR 1) wherein the assessee has advanced interest free loan to its sister concerns out of borrowed funds. The assessee claimed interest on such funds as revenue expen diture on the grounds that interest free loan was given to the sister concern as a measure of commercial expediency. The expression commercial expediency is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation but ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its M.D and Employees Welfare Trust for acquisition of its shares was confirmed. Aggrieved by the order of the ld CIT (A), the assessee has raised this issue in the present appeals filed before the Tribunal for both the A.Ys under consideration. 5. We have heard the arguments of both the parties and also perused the material on record. The ld Counsel for the assessee has submitted that a similar issue involved in assessee s own case for A.Y 2008-09 was restored by the Tribunal to the file of the AO vide its order dated 21.06.2013 passed in ITA No.1789/Hyd/2011 with the following directions given in paragraph No.28: 28. We have heard rival submissions of the parties and perused the material on record. It is the contention of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest bearing loans were utilized for giving advance to the Managing Director and to the Employees Welfare Trust and also submitted relevant details such as Reserves and Surplus of the Company. In support, the assessee company submitted the cash flow of the above term loans and utilization certificate required to be submitted to lending banks which are duly certified by the CA to the effect that the term loans raised were utilized for the purpose of its portfolio lending business . 7. The ld Counsel for the assessee has contended that since the same loan given by the assessee company to the employees welfare trust in A.Y 2008-09 has continued in both the years under consideration i.e. A.Ys 2009-10 and 2010-11, the decision rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,09,307/- as the assessee failed to produce necessary evidences. 3. The Hon'ble CIT (A) ought to have appreciated that the assessee had not offered the amount of ₹ 9,09,307/- to tax in any earlier A.Ys and is not eligible for relief u/s 36(i)(vii) of the Act . 11. As is clearly evident from the grounds raised by the Revenue, the tax effect involved in the appeal of the Revenue is less than Rs.Rs..3.00 lakhs and this position is not disputed even by the ld DR. 12. After hearing both the parties, we are of the opinion that the tax effect involved in this appeal is less than ₹ 3 lakhs. Being so, in view of the Instruction No. 3 of 2011 (F. No. 279/ Misc. 142/2007-ITJ), dated 9th February, 2011 issued by the CBDT, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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