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M/s. Industrial Feeders, Chennai Versus The Assistant Commissioner of Income Tax

2016 (3) TMI 683 - MADRAS HIGH COURT

Disallowance of interest on the loans advanced by the assessee to its sister concerns - Held that:- a look at the orders of the three Authorities would show that there was no basis for the Authorities to come to the conclusion that the amounts were lent for non business purposes. M/s.Kriscast is obviously a casting company. The appellant is a manufacturer of G.I. castings. There was no indication about the nature of businesses that the appellant as well as the borrowers were engaged in. A findin .....

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r. S. Sridhar For the Respondents : Mr. T. R. Senthilkumar JUDGMENT ( Judgment Was Delivered By V. Ramasubramanian,J ) Both the above appeals, filed by the assessee, were admitted on 18.12.2006 on the following substantial questions of law : "TCA.No.2343 of 2007 : (i) Whether the Tribunal is correct in concluding that the disallowance of interest sustained in the earlier assessment year would equally apply to the assessment year under consideration in spite of the fact of binding precedents .....

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nsidered in the earlier order ? and (iii) Whether the Tribunal is correct in concluding that the funds borrowed for business were diverted for non business purpose even though the accounts maintained duly audited had reflected totally a different picture in as much as the accounts relevant to consider the correctness of disallowance were never taken into consideration ? TCA.No.2644 of 2006 :" (i) Whether the Tribunal is correct in concluding that the funds borrowed for business were diverte .....

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r relevant to the assessment year under consideration ? and (iii) Whether the Tribunal is correct in law in allowing the appeal of the Revenue without properly appreciating the written submissions of the appellant ?" 2. Heard Mr. A. S. Sriraman, learned counsel for the appellant and Mr.T.R.Senthilkumar, learned Standing Counsel for the Department. 3. For the assessment year 1991-92, the appellant/assessee filed its Form No.12 and they filed a return of income on 31.10.1991 admitting a total .....

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Consequently, the Assessing Officer disallowed interest on the said amount at 24% per annum. 5. On appeal by the assessee, the Commissioner of Income Tax (Appeals) found that what was lent during the relevant assessment year was only ₹ 2,89,610/- and that therefore, interest on the said amount could be disallowed. Therefore, the Commissioner of Income Tax (Appeals) allowed the appeal in part and remitted the matter back to the Assessing Officer for re-computation of the quantum of disallo .....

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dated 29.3.1996, disallowed the interest on the amount so lent. 7. Following the same pattern as in the case of the assessment year 1991-92, the Commissioner of Income Tax (Appeals) allowed the appeal in part and limited the disallowance only to the quantum of loan advanced during the relevant assessment year. This order was also reversed by the Tribunal, but this time after hearing the arguments of both parties. In other words, the order of the Tribunal dated 17.3.2006 in respect of the assess .....

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