9911796707
TMI Blog2015 (5) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... e record. Facts in brief are that the assessee is engaged in business of trading in rights of cinematographic films and television programme software etc. During the course of scrutiny assessment the AO disallowed interest paid to Star India Pvt. Ltd. as the loan transactions have not been declared in Form 3CEB and, therefore, escaped addition of Transfer Pricing officer. The AO further held that advance was not taken as business expediency, but was to evade taxable income in the hands of the assessee. By the impugned order the CIT(A) deleted the disallowance after observing as under :- "2.3 Facts, materials available on record and cited judicial precedence have been considered. The A.O.'s observation in respect of business expediency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant to take loans or whether there were adequate funds available with the appellant lying unutilized, ignoring which such loans have been taken and payment of interest debited. In view of the facts of the case and material available. the appellant's claim seems justified. The said disallowance of interest expense of Rs. 1,37,94,000/- is deleted." 4. We have considered rival contentions and found from the record that the financial statements of assessee evidenced utilization of borrowed funds for procuring rights in respect of various genres of films from third parties for sale to SGL Entertainment. As such borrowed funds on which interest has been paid were utilized for purpose or business entitling assessee to claim deduction u/s 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) (65 ITR 381) (SC), and CIT v/s Rajararn Bandekar (1994) 208 ITR 503 (Bom). As per the finding recorded by the CIT(A), M/s Star India Pvt. Ltd. is not coming within the purview of Section 40A(2), therefore, it cannot be said that interest so paid to a related party so as to avoid burden of tax on the assessee. The detailed findings of the CIT(A) recorded at para 2.3 and 2.3.1 has not been controverted by department by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of CIT(A) deleting disallowance on interest. 5. As the facts and circumstances during the assessment year 2006-07 are same, following reasoning given in the assessment year 2005-06 above, we do not find any infirmity i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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