TMI Blog2016 (7) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... that therefore, the claims were required to be disallowed. Surely, the Assessing Officer was not acting in the capacity of a revisional authority and, therefore, had no jurisdiction to judge the consideration bestowed to these claims by the Assessing Officer. In fact, there is yet another additional ground with respect to the ground of addition recorded in the reasons. The assessee has in the objections pointed out that no such claim of expenditure was ever made and the amount was shown in the closing stock thereby eliminating from the expenditure side, an issue not examined by the Assessing Officer while disposing of such objections at all. Be that as it may, on the first ground itself of the claim having been examined by the Assessing Officer, the petition must succeed. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 13852 of 2014 - - - Dated:- 12-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR B S SOPARKAR, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged the notice for reopening dated 24.3.2014 issued by respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed to the extent of advance given interest on advance at 12% roughly works out to ₹ 45.15 lakh which was to be brought to tax. 3.1 In view of the above facts, I have reason to believe that income to the tune of ₹ 45.15 lakhs chargeable to tax has been under assessed in the case of the assessee M/s. Fuse + Media Pvt. Ltd. for the assessment year 2009-10 and is required to be reassessed. 4. In view of above, I have reason to believe that income to the tune of ₹ 2.19 Cr (1.74 Cr. +45.15 lakhs) has escaped assessment. 2. The petitioner raised objections to the process of reopening under communication dated 11.6.2014. Such objections were rejected on 16.9.2014. 3. Learned counsel for the petitioner taking us through the material on record contended that the Assessing Officer had examined both the claims mentioned in the reasons recorded for reopening the assessment. Any attempt on his part to now reexamine such issues would be based merely on change of opinion. 4. On the other hand, counsel for the Revenue submitted that the Assessing Officer had recorded proper reasons for reopening the assessment. 5. The reasons would indicate two grounds on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced hereunder: (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession: Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account or not); for any period beginning from the date on which capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. The said section is an enabling provision for deduction of interest on the amounts borrowed for the purpose of business or profession. in this regard, as submitted earlier, we wish to submit that FMPL is engaged in the business of investment in film production and as a part of its larger business objective, it has incorporated FlPL to jointly carry out the activities of animation studio and to produce animation episodes. FlPL has produced 7 (seven) episodes of Doubtsourcing series . These episodes have also won two international awards. As ultimately, FlPL has been furthering the business objective of FMPL by producing animation episodes, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital, even though the funds have been utilized for making advances to the subsidiaries where advancing of such funds to the subsidiary would be considered as a commercially expedient and prudent step. Further reliance can also be placed on the decision of the Hon ble Madras High Court in the case of CIT vs. Sambandham Spinning Mills Limited (298 lTR 306) wherein the Hon ble High Court has held that no disallowance of interest paid on borrowed capital be made when the tax payer has granted interest free advance to its sister concern. In view of the above decisions, it is submitted that money advanced to a wholly owned subsidiary based on the commercial expediency of the business, no disallowance can be made in accordance with provisions of Section 36(1) (iii) of the Act. 7. It can thus be seen that both the issues came up for consideration before the Assessing Officer at the time of original assessment. In the letter dated 27.7.2011, the assessee had given the breakup of the expenditure of sum of ₹ 1.74crores pointing out that the same was closing stock as on 31.3.2009. The assessee also gave breakup of such sums and the purpose for which such expenditure was incurred. ..... 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