TMI Blog2020 (7) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... ed view, the assessee is very much entitled for claim of interest paid on borrowed capital. We, accordingly, set aside the findings of the CIT(A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee. - ITA No. 82/DEL/2016 - - - Dated:- 30-6-2020 - Shri Bhavnesh Saini, Judicial Member, And Shri N.K. Billaiya, Accountant Member For the Assessee : Shri Salil Kapoor, Sr. Adv For the Revenue : Ms Rakhi Vimal, DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order of the CIT(A) - 1, New Delhi dated 13.10.2015 pertaining to A.Y 2012-13. 2. The solitary ground by the assessee which was argued before us by the ld. counsel for the assessee relates to the disallowance of interest of ₹ 82,51,230/- u/s 36(1)(iii) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short]. 3. Briefly stated, the facts of the case are that assessee company is engaged in the business of production, generation, storage, transmission, distribution and supply of electricity and power and energy. The assessee company is a wholly owned subsidiary of ACB (INDIA) Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants are managed through ACBIPL and all rejects based thermal are managed by ACBIL. The memorandum of ACBIPL reads as under: 1. To carry on the business of production, generation, storage, transmission distribution and supply of electricity (bulk and retail), power and ei 2. To promote, own, acquire, erect, construct, establish, operate, m takeover power companies, hold share in power companies, and use the e electricity generation capacities owned by any generators, including an title or interest therein as well as power purchase agreement, for venture with other for promoting and to own, acquire, develop mines for power generation and other end uses in any parts of Indi and elsewhere through tenders, license from appropriate authority all such acts and things necessary in connection with the same company may from time to time think properly to be acquired for and to set up, promote, operate and carry on the business of coa washeries, liquefied natural gas for supply of fuel to stations and to 3. To take over, acquire, operate, maintain, manage and use companies power plants, cogeneration power plants, energy conservation proj houses, and transmission and distributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above test in Atherton's case, {supra) has been approved by this Court in several decisions e.g.Eastern Investments Ltd. v. CIT[1951] 20 ITR 1, CITv.ChandulalKeshavlaldt Co. [1960] 38 ITR 601 etc. The expression commercial expediency is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure, if it was incurred on grounds of commercial expediency. It has been repeatedly held by this Court that the expression for the purpose of business is wider in scope than the expression for the purpose of earning profits vide CIT v. Malayalam Plantations Ltd, [1964] 53 ITR 140, CIT v. Birla Cotton Spg. AWvg. Mills Ltd. [1971] 82 ITR 166 etc. It is important to mention that even the investments made in share capital of the subsidiary companies by the assessee could not be called the investments for non-business purpose because in the memorandum and the articles of the company, one of the objects the assessee-company mentioned is investments in shares of other companies by the assessee We r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital of subsidiary companies and even the funds raised during the year under consideration have been invested in subsidiary shares of group companies and also repaying the loans. The Assessing Officer was of the firm belief that borrowed funds have been utilised for non business purposes and, therefore, the claim of interest u/s 36(1)(iii) of the Act is not justified. The Assessing Officer was of the opinion that the interest paid on the borrowings should have been for the purpose of business and if the capital borrowed is not utilised for the purpose of business, the assessee is not entitled to deduction under this section. The Assessing Officer, accordingly, made addition of ₹ 82,51,230/-. 9. The Assessing Officer further justified the disallowance u/s 37(1) of the Act also. 10. The assessee carried the matter before the ld. CIT(A) but without any success. 11. Before us, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 12. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and through her written submissions, placed reliance on several judicial decisions. 13. We have given thoughtful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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