TMI Blog2016 (5) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that once it is established that there is nexus between the expenditure and purpose of business, revenue cannot justifiably claim to put itself in arm chair of businessman or in position of Board of Directors and assume role to decide how much is reasonable expenditure having regard to the circumstances of the case - ITA No. 228 of 2010 (O&M) - - - Dated:- 27-4-2016 - MR. JUSTICE AJAY KUMAR MITTAL AND MRS. JUSTICE RAJ RAHUL GARG, JJ. FOR THE APPELLANT : Ms. Radhika Suri, Sr. Advocate with Ms. Rinku Dahiya, Advocate FOR THE Revenue : Mr. Rajesh Katoch, Advocate Ajay Kumar Mittal,J. 1. The delay in re-filing the appeal is condoned. 2. This appeal has been filed by the appellant-assessee under Section 260A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withdrawing the claim of depreciation and business loss which had been adjusted for the assessment year 2003-04. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] claiming that the advances made to the sister concern were not out of interest bearing funds and the same could not be disallowed. The CIT(A) rejected the contention of the assessee following the judgment of this Court in CIT vs. Abhishek Industries, (2006) 286 ITR 1 and dismissed the appeal vide order dated 9.6.2008, Annexure A.3. Still not satisfied, the assessee filed appeal before the Tribunal. The Tribunal dismissed the appeal vide order dated 31.10.2008, Annexure A.4. Hence the instant appeal by the assessee. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for some sentimental or personal reasons and not on the ground of commercial expediency, the interest thereon could not have been allowed under section 36(1)(iii) of the Act. In Madhav Prasad's case [1979 (118) ITR 200 (SC)], the borrowed amount was donated to a college with a view to commemorate the memory of the assessee's deceased husband after whom the college was to be named, it was held by this court that the interest on the borrowed fund in such a case could not be allowed, as it could not be said that it was for commercial expediency. 28. Thus, the ratio of Madhav Prasad Jatia's case [1979 (118) ITR 200 (SC)] is that the borrowed fund advanced to a third party should be for commercial expediency if it is sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iates's case (supra), while considering disallowance of interest under section 36(1)(iii) of the Act, it was recorded by this Court as under:- The Commissioner of Income Tax (Appeals) and the Tribunal found as a matter of fact that the company had interest free advances from its directors/shareholders and the members of their families amounting to Rs. 315.11 lakhs as against the interest free advances made by the company aggregating to Rs. 219.72 lakhs as on March 31, 2008. In view thereof, it was rightly inferred that the respondent/assessee had enough interest free funds which would cover the advances also made interest free. The matter is covered against the appellant in this regard by our order and judgment dated July 16, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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