TMI Blog2020 (8) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... simultaneously crediting the said account being interest on loan given to M/s. Sagar Power Ltd. Entry to entry amount is debited credited to the account. Assessee is not charging any interest due on the loan disbursed to the ICICI bank to the subsidiary company. The said interest is shown as recoverable from M/s. Sagar Power Ltd. in the final analysis, no amount has been claimed as a deduction. In these facts and circumstances, there is no merit in making the aforesaid addition in the hands of the assessee on account of interest attributable to the loan raised from ICICI Bank for the so called benefit of the subsidiary. Similarly, the loan which has been shown as due to ICICI Bank is in turn being treated as advance to the subsidiary. On such advancement of loan to the subsidiary, there is no merit in making any disallowance on account of notional interest. - Decided in favour of the assessee. Difference in gross receipt of interest - AO difference in gross receipt of interest - HELD THAT:- Issue relating to the availment of loan from ICICI bank and its advancement to subsidiary M/s. Sagar Power Ltd. in the paras above. The assessee on the other hand has not claimed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting continuous power and further that the AO has earlier disallowed from interest claim and again making addition of notional interest. 6. The learned CIT(A) erred in confirming the addition of ₹ 1,22,71,842 interest income received from subsidiary in spite of the fact that the paid similar amount to the bank on the loan availed and given to subsidiary an that the assessee has not claimed such interest as deduction in P L a/c merely on the basis of TDS certificates without considering the facts emanating from ledger copies filed and financial 7. Without prejudice to the above, the learned CIT(A) ought to have given direction to allow the interest that is paid to the bank of similar amount as deduction as the same has not been debited to the P L ale having set off against interest received from the subsidiary. 3. The first ground of appeal raised by the assessee is general in nature and does not require any adjudication; hence dismissed. 4. Ground of appeal No.2 raised by the assessee is against the addition of ₹ 15,50,466/- being amount of sales tax advance paid. 5. Ground of appeal Nos. 3 4 raised by the assessee is on account of disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said amount was contingent liability, but in view of the provision of section 43B of the Act, such amount are duly allowable as expenditure in the year of payment. However, the same is not the case of the assessee and accordingly, we direct the Assessing Officer to delete the addition of ₹ 15,50,466/-. Thus, Ground of appeal No.2 raised by the assessee is allowed. 12. Now, coming to the Ground of appeal Nos. 3 4 raised by the assessee. 13. Briefly in the facts of the case relating to the issue the Assessing Officer noted that during the year under consideration the assessee had claimed interest of ₹ 49,50,000/- against loans raised. The Assessing Officer on verification further noted that the said loan was not availed for business purposes of the assessee and was availed for transferring of funds to the subsidiary. The Assessing Officer was of the view that the loan received by the assessee company was not utilized exclusively for business purposes and hence, the interest paid to the tune of ₹ 49,50,000/- was not allowable as an expenditure. The CIT(A) upheld the order of the Assessing Officer and against which the assessee is in appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere passed in the books of accounts and outstanding of the loan was shown in the balance sheet. The case of the Revenue authorities is that where the loan raised by the bank has been utilized for advancing to the subsidiary, then the interest due on such loan is to be disallowed in the hands of the assessee. The case of the assessee on the other hand is firstly that the said transaction between the assessee and its subsidiary is wholly business transaction. M/s. Sagar Power Ltd. was involved in generation of power and the said activity was undertaken by the subsidiary for the sole benefit of the assessee company. The total power generated was supplied to the assessee @ 0.25 paisa less than State Electricity Board charged. Consequently, the loan could be said to be a business transaction under which the benefit flowed to the assessee. The assessee was engaged in the manufacturing of cement and such power supply by the subsidiary advanced the business of the assessee. We are of the view that following the dictate of the Hon ble Supreme Court in S.A. Builders Ltd. (supra), there is no merit in disallowance of interest on such advancement of loan to the subsidiary. 18. However, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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