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TMI Blog2015 (4) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal was correct in law in deleting the addition of Rs. 1,00,97,108 made by the Assessing Officer on account of net amount of current assets of the manufacturing division transferred to its subsidiary company? 3. Whether the ITAT erred in upholding the decision of Commissioner of Income Tax (Appeals) whereby the addition made by the Assessing Officer on account of notional interest amounting to Rs. 47,85,650/- was deleted? 4. Whether the ITAT erred in upholding the decision of Commissioner of Income Tax (Appeals) whereby the addition of Rs. 61,78,414/- made by the Assessing Officer on account of expenses on Brokerage and Commission was deleted? Question No.1 2. The facts in respect of this question are that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expression „for the purpose of business‟ under Section 36(1)(iii) and Section 37 is wider than the expression "for the purpose of earning income, profits and gains" under Section 57(iii). Therefore, it was held that interest paid for the purpose of or in the course of carrying on business is allowable in the year in which the liability arose. This Court is also of the opinion that given the dictates of consistency, the view adopted by the ITAT is fair and reasonable. Having regard to the reasoning adopted by the ITAT, this Court finds no cause to interfere with - as it is in conformity with the judgment of the Supreme Court in Madhav Prasad Jatia's case (supra). The question of law framed has to be answered in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only if anything over and above the book value i.e. the cost is paid by the transferor to the transferee. Mere realisation of the assets or changing the asset from one form to another form do not give rise to income or profit, unless something over and above the cost of such assets is realized, e.g., if the bank Fix Deposits are converted in cash or cash on hand is converted to acquire any asset, do not give rise to income. However, in this case, as noted above there being no payment in excess of cost being paid either in form of cash or shares by the transferee, a wholly owned subsidiary company, to the transferor i.e. assessee in this case, the question of brining anything to tax does not arise. There is no evidence of anything more havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain amounts paid towards the income tax liabilities of such subsidiaries companies. The assessee's appeal was accepted by the CIT (A) who noticed that for all previous years commencing from AY 1984-85 to 1991-92, such advances had been accepted and additions not made. The CIT (A) also recorded as follows: - "However, the appellant has placed before me copies of relevant bank accounts to show that these advances have not been made out of borrowed funds. There is no nexus between the borrowed funds on which the interest is being paid by the appellant and the moneys advanced to the subsidiaries. There cannot be any ground for charging and notional income to tax. However, the proportionate interest could be disallowed if the borrowed funds ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds brokerage and commission. The amount was paid to its brokers for booking and sale of certain properties during the assessment year. The Assessing Officer disallowed this expenditure on the ground that during the year the conveyance of the sale deeds were not executed. The CIT (A) and ITAT accepted the assessee's contentions and set aside the disallowance. At the outset, we notice that the assessee's explanation clearly stated is as follows: - "In this connection it is submitted that brokerage and commission is not a direct expenses for acquiring to a specific property but it is in fact financial cost/selling expenses and is fully allowable in the year in which the same is incurred. The property brokers who have rendered their services t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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