TMI Blog2015 (10) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... , disallowance of interest paid was not justified under Section 37(1). This is the business man who knows how to run his business activity. The assessee has run his business activities in a way which they like and was beneficial for them. If by any reason they have made some tax planning, that tax planning is also in the four corner of law, which is permissible. Therefore, for this reason also, disallowance of interest was not justified - Decided in favour of assessee. Deemed dividend - CIT(A treating that loan and interest accrued thereupon given on the assessee firm by OCAPL did not fall within the ambit of section 2(22)(e) - Held that:- The deemed dividend can be assessed only in case of person who is a shareholder of lender company and not in the hands of the person other than the shareholder. See COMMISSIONER OF INCOME TAX Versus ANKITECH PVT LTD. & OTHERS [2011 (5) TMI 325 - DELHI HIGH COURT] - Decided in favour of assessee. - ITA No.352/Nag./2013, ITA No.353/Nag./2013, ITA No.354/Nag./2013, ITA No.355/Nag./2013 - - - Dated:- 28-8-2015 - Mukul Kr Shrawat and Shamim Yahya, JJ. For The Appellant Rep : Shri V K Lukka For The Respondent Rep : Shri K P Devani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first appellate authority, the learned CIT(A) has followed the decision of the Tribunal, Nagpur Bench, pronounced in assessee's own case for the assessment year 2006-07 and 2007-08, bearing ITA no.65 and 66/Nag./2011, dated 9th January 2013. Following the order of the Tribunal, the impugned addition was deleted. 5. At the outset, we have been informed by the parties appearing before us that on identical facts and circumstances in the past i.e., for assessment year 2006-07 and 2007-08, in assessee's own case, the Tribunal, Nagpur Bench, has decided this issue in assessee's favour vide order dated 9th January 2013. In addition to the said order of the Tribunal, it has also been pleaded that when the withdrawals were made by the partners to the extent either capital or accrued profit, then there should not be any disallowance of interest, if there is no nexus between interest bearing loan and withdrawals made by the partners from their capital account. The case laws cited which were also before the learned CIT(A) are as under:- i) ITO v/s Tajmahal Hotel, 2 TTJ 1509 (Hyd.); ii) ITO v/s B. Nalachakaravarthy, 22 TTJ 542 (Mad.); iii) ITO v/s Tyade Links v/s ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in our considered view, disallowance of interest paid was not justified under Section 37(1). This is the business man who knows how to run his business activity. The assessee has run his business activities in a way which they like and was beneficial for them. If by any reason they have made some tax planning, that tax planning is also in eh four corner of law, which is permissible. Therefore, for this reason also, disallowance of interest was not justified. In view of the above facts and circumstances of the case, we delete the addition made on account of disallowance of interest for both of the years. 7. Once the respected of co-ordinate bench in assessee's own case on identical facts have taken a view in assessee's favour, hence, in the absence of any contrary material, we find no reason to take any other view but to respectfully follow the same. Resultantly, the ground no.1, raised by the Revenue is hereby dismissed. 8. Ground no.2, reads as under:- 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in treating that loan of ₹ 1,66,32,595 and interest accrued thereupon of ₹ 19,72,929 given on the assessee fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's own case for the assessment years 2006-07 and 2007-08, order dated 9th January 2013, and after considering the decision of the Hon'ble Jurisdictional High Court in ACIT v/s Bhaumik Colours Pvt. Ltd., 118 TTJ 001 (Bom.) and Universal Medicare Pvt. Ltd., 324 ITR 263 (Bom.) deleted the addition. For ready reference in Para-7 is reproduced below:- 7. After considering the order of the Assessing Officer and learned CIT(A), we found no infirmity in the findings of the learned CIT(A). the assessee's firm is neither a registered shareholder nor beneficiary share holder in the said company, who is a creditor of the assessee firm. The Special Bench of the Tribunal in the case of Bhaumik Colour Pvt. Ltd. (supra) has held that addition can be made under section 2(22)(e) in the case of beneficiary shareholder only. This view of the Tribunal has been confirmed by the Hon'ble Jurisdictional High Court in the case of CIT v/s Universal Medicare Pvt. Ltd., reported in 324 ITR 263 (Bom.) in view of these facts and circumstances of the case, we hold that learned CIT(A) was right in deleting the addition made by the Assessing Officer in view of the provisions of section 2(22)(e) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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