TMI Blog2016 (5) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed the discount and interest on borrowing through commercial papers and non-convertible debentures. Consequently, the Commissioner of Income Tax (Appeals) and the Tribunal have come to the correct conclusion and have deleted the addition made by the Assessing Officer. - Decided against revenue - ITA 546/2013 - - - Dated:- 11-5-2016 - Badar Durrez Ahmed And Sanjeev Sachdeva, JJ. For the Appellant : Mr Rahul Chaudhary with Mr Raghvendra Singh and Mr Anup Kesari For the Respondent : Mr Ved Jain with Mr Pranjal Srivastava JUDGMENT Badar Durrez Ahmed, J 1. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the said Act ) is directed against the order passed by the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Ajay Aggarwal and others. It was further pointed out that the expenses incurred on commercial paper pertaining to the assessment year 2006-07 had been booked under respective accounting heads in both the companies (i.e., the respondent/assessee company and A M Publications Limited) in the financial year 2006-07. The discount on commercial paper issued by the respondent/assessee was ₹ 4,22,87,991/- and the discount on commercial paper issued by A M Publications Limited was ₹ 4,22,87,991/- resulting in a total of ₹ 8,45,75,982/-. Since there was a shortage of funds, the non-convertible debentures had also been issued. The Assessing Officer observed that in the proceedings before the Company Law Board, a prayer had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tures which had been issued to repay the commercial papers, which, in turn, according to the Assessing Officer, had been taken for providing funds for purchase of shares of Shri Ajay Aggarwal and others was also held by the Assessing Officer to be not allowable under Sections 36(l)(iii), 37(1) and 57(iii) of the said Act. 5. Being aggrieved by the said disallowance of the total sum of ₹ 10,79,75,982/- on discount and interest on borrowing through commercial paper and non-convertible debentures, the respondent/assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who decided, by virtue of his order dated 20.01.2012, in favour of the respondent/assessee. The Commissioner of Income Tax (Appeals) did not agree w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on borrowed funds was concerned. Consequently, the Commissioner of Income Tax (Appeals) held that the addition of ₹ 10,79,75,982/- could not be sustained on facts and in law and, therefore, deleted the same. 6. Being aggrieved by the decision of the Commissioner of Income Tax (Appeals), the revenue preferred an appeal before the Income Tax Appellate Tribunal being ITA No. 1808/Del/2012. The Tribunal noted that the utilization of the funds borrowed for the purpose of buying the shares of Shri Ajay Aggarwal and others by the respondent/assessee, consequent upon the order dated 07.08.2006 passed by the Company Law Board, was not applicable for the year under consideration. The Tribunal observed that it was in the preceding year that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal. The main point which needs to be stressed is that we are concerned with the assessment year 2008-09. In the present year, there was no re-structuring and/or purchase of shares. All that had happened in the preceding year. As on 01.04.2007 itself, which was the first day of the year under consideration, A M Publications Limited stood merged with and into the respondent / assessee. All the funds available at that point of time with the respondent / assessee were, in the course of the year, deployed in the business of the respondent/assessee. Therefore, the Assessing Officer could not have disallowed the discount and interest on borrowing through commercial papers and non-convertible debentures. Consequently, the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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