TMI Blog2017 (5) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/-. Thus, there was sufficient non-interest borrowing funds out of which the assessee had advanced/invested in sister concerns. It was further recorded that in the assessment year 2012-13 also, the assessee had sufficient interest free funds to make investment in the group companies relying upon the decision of the Apex Court in Hero Cycle Private Limited Vs. Commissioner of Income Tax (Central) [2015 (11) TMI 1314 - SUPREME COURT OF INDIA] and Commissioner of Income Tax-I, Ludhiana Vs. M/s Abhishek Industries Limited, Ludhiana (2006 (8) TMI 123 - PUNJAB AND HARYANA High Court ). - Decided in favour of assessee. - ITA No. 31 of 2017 (O&M) - - - Dated:- 23-2-2017 - MR. AJAY KUMAR MITTAL MR. RAMENDRA JAIN JJ. Present: Mr Rajes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had been the basic reason for the assessee to continue to raise interest bearing funds and the advancing of interest free funds to sister concerns had to be justified to be a business necessity which had not been done by the assessee? 3. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee is engaged in the business of publication of help and guide books. During the course of assessment proceedings, it was noticed by the Assessing Officer that during the relevant assessment year, the assessee had an amount of ₹ 20,32,60,000/- as investments in various related concerns but had not received any interest or return thereon. According to the assessee, interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 27.02.2015, Annexure A.II. Not satisfied with the order, the assessee filed an appeal before the Tribunal. Vide order dated 29.06.2016, Annexure A.III, the Tribunal allowed the appeal filed by the assessee, deleting the addition of ₹ 54,10,225/- on account of disallowance of interest expenditure. Hence, the instant appeals by the revenue. 4. We have heard learned counsel for the parties. 5. The matter has been considered by the Tribunal in detail. A perusal of the order passed by the Tribunal shows that the capital of the assessee company was ₹ 31,71,64,888/- for the assessment year 2010-11. The investment in sister concerns in the shape of share application money was to the tune of ₹ 20,32,60,000/-. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 17,41,39,750/-, therefore, the total of non interests bearing funds available with the assessee were paid at ₹ 49,43,04,638/-. These figures are verifiable from the copies of balance sheet as placed in (PB page 2). Out of total available funds on which no interest was paid by assessee amounting to ₹ 49,43,04,638/-, the assessee had advanced ₹ 20,32,60,000/-, therefore, one fact is clear that in ITA No.196(ASR)/2015, there was sufficient non interest borrowing funds out of which the assessee had advanced/invested in the sister concerns. 10. Similarly, we find that for assessment yar 2012-13 the capital of the firm as per balance sheet placed at (PB Page 3) was ₹ 13,21,61,500/- and the interest free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssertion was never denied. The assessee owned about 89 per cent of the equity capital. When a holding company invested money for the purpose of the business of its subsidiary, it must necessarily be held to be an expense on account of commercial expediency. A financial benefit of any nature derived by the subsidiary on account of the amounts advanced to it by the holding company would not merely indirectly but directly benefit its holding company. There would be a direct benefit on account of advance made by the assessee to its sister company, if it improved the financial health of the sister company and made it a viable enterprise. But it was not necessary that the advance results in a positive tangible benefit. Thus, the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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