TMI Blog2019 (1) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... unt was provided to the Government of Sikkim as per the mutual understanding.he consortium of four Nationalised Banks, the assessee had paid interest of ₹ 27,10,50,225/- and had also incurred processing charges and guarantee fees amounting to ₹ 3,74,20,576/-. As against this total expenditure incurred in respect of the loan availed from the consortium of Banks amounting to ₹ 30,84,70,801/-, the assessee had received interest on investment made in Fixed Deposits out of the said loan to the extent of ₹ 5,48,37,553/ and the balance amount of ₹ 25,36,33,248/- was charged to the State Government as per the mutual understanding/agreement. It was thus a case wherein the surplus funds available from the loan taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 148 was issued by the Assessing Officer on 19.05.2015, in response to which the return of income was filed by the assessee on 12.06.2015 declaring total income of ₹ 1,09,25,559/-. In the Profit Loss Account filed along with the said return, a sum of ₹ 27,14,80,961/- was debited by the assessee on account of interest expenses. As noticed by the Assessing Officer during the course of assessment proceedings, substantial loans of ₹ 285 crores were obtained by the assessee from consortium of Banks and the same was passed on to the Government for acquisition of land and payment of compensation. He also noticed that interest only to the extent of ₹ 25,36,33,248/- was charged by the assessee to the State Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) As per notes of accounts, the corporation has adopted a policy of charging interest to the Government of Sikkim on the above loan to the equivalent of interest charged by the consortium of four banks together with other expenses incurred in connection with said securitization loan minus the interest earned from securitization loan funds invested as term deposit. (iv) The Assessee has (vide letter dated 09/12/2016) has informed the AO about the basis on which interest has been charged from the State Government. The calculation is as under:- Interest Charged to Govt. of Sikkim Total Loan Paid to Banks as per schedule 1 16 of the Audited Accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been borrowed for the purpose of business of the Assessee. In view of the above, the disallowance made of ₹ 1,74,16,977/- stands deleted and all the grounds related to the same are allowed . Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal. 4. We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted on behalf of the assessee before the authorities below as well as before us, the loan of ₹ 285 crores availed from the consortium of four Nationalised Banks was partly invested by the assessee in FDRs and the balance amount was provided to the Government of Sikkim as per the mutual understanding. In r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
