TMI Blog2017 (3) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... SMT. SHAVETA NAKRA DUTTA, SR. DR ORDER PER H.S. SIDHU, JM The Assessee has filed the Appeal against the impugned Order dated 2.12.2013 of Ld. CIT(A)-X, New Delhi pertaining to assessment year 2009-10. The assessee has taken the following grounds:- 1. That the Ld. CIT(A), New Delhi, has erred in law as well as on facts and in circumstances of the case in upholding the disallowance of ₹ 1,60,95,995/- out of interest expenses. 2. That the Ld. CIT(A), New Delhi has erred on facts and in circumstances of case by upholding the disallowance without appreciating the complete facts. 3. That the Ld. CIT(A), New Delhi has erred in law as well as on facts and in circumstances by disregarding the verdicts of Hon ble Jurisdictional High Court. 4. The appellant craves leave to add, amend or vary from the aforesaid grounds of appeal at or before the time of hearing. 2. The brief facts of the case are that the Return of income declaring income of ₹ 4,91,90,884/- before set off of unabsorbed depreciation for AY 2002-03 and NIL income after partial set off of unabsorbed depreciation was filed on 29.9.2009 through E-filing. The case was processed u/s. 143 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company advanced Inter Corporate Deposits (ICD) to M/s Palka Investment Pvt Ltd. and charged agreed interest on the ICD. Details of the same are given as under: Date Amount Rs. Rate of Intt Interest Amt Rs TDS Rs 23.06.2008 7,48,00,000/- 14% 3,15,594 58,511 24.06.2008 5,96,00,000/- 14% 2,28,602 46,498 3. It is a matter of fact that during the year under consideration, M/s Palka Investment Pvt. Ltd. became subsidiary of the appellant company which is evident from the financial statement of the appellant (Schedule - 5 'Investments' and copy of 'resolution' dated 18-08-2008). 4. On becoming of its subsidiary on 04-07-2008, for business considerations, the appellant company converted its existing loan of ₹ 13,44,00,000/- to interest free loan and granted further interest free loan amounting to ₹ 3,15,00,000/- to M/s Palka Investment Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter of Hero Cycles Pvt Ltd Vs CIT, Ludhiana [Civil appeal no. 514/2008 decision delivered on 05-11-2015] while dealing with the term 'Commercial Expediency' held that Once it is established that there is nexus between the expenditure and the purpose of business, the revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and to decide how much is reasonable expenditure having regard to the circumstances of the case. Copy of the decision is attached herewith at page no 36 - 44. 14. Hon'ble Hon'ble Supreme Court in the matter of CIT, Bombay Vs. Walchand and Co. Private Ltd (1967) 65 ITR 381 (SC) ITA No 1249/2011 held that in applying the test of commercial expediency for determining whether an expenditure was wholly and exclusively for business, the expenditure has to be adjudged from the point of view of the businessman and not of revenue. It is humbly prayed that notional interest made by the AO and confirmed by the CIT(A) may kindly be deleted. 6. On the contrary, Ld. DR relied upon the orders of the authorities below. 7. We have heard both the parties and perused the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der that the funds have been used for the personal benefit of the directors. 7.2 We further find that in Assessee's own case, in the next Assessment Year i.e in AY 2010-11, the CIT(A) has deleted the same addition vide order dated 17-02-2015 by holding as under:- 4.2 I have consider the assessment order, written submission filed by the Ld. AR of the appellant, I agree with the argument of the Ld. AR of the appellant. The interest bearing loan was converted into interest free loan on the conversion of M/s Palka Investment Pvt. Ltd. into a subsidiary of the appellant company. Loan granted to subsidiary company is to be treated as business purposes. Hence I am of the view that the Ld. AO has wrongly taken the view that interest free advances were granted to the subsidiary company from the amount borrowed on interest. Hon ble Delhi High Court in the case of CIT vs. Dalmia Cement Bharat Ltd. 330 ITR 595 held that In the absence of anything to show that the interest free loan given by the assessee company to its subsidiary company was for personal benefit of any director or for any other personal reasons, it has to be held that the loan was given for the purposes of business ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
