TMI Blog2021 (7) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... ed monies. It is also not the case where the assessee had claimed any deductions on the interest paid for borrowing the monies to advance interest-free loans to its subsidiaries. Rather, the material on record suggests that the assessee had reserves of over ₹ 1,000 crores and further, even the subsidiaries, did not derive any interest income as such from out of these interest-free advances received from the assessee. All these circumstances do establish a case of commercial expediency even applying the principles laid down in S.A. Builders (supra). Therefore, based on S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT ] there is no case made out to interfere with the view taken by the CIT (Appeals) and the ITAT. The assessee, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out affording an opportunity to the Assessing Officer to examine the same though, the assessee had not been able to prove, with evidence, at the time of the assessment proceeding that the borrowed funds were wholly and exclusively used for business purpose and not diverted to give interest free advances to sister concerns? B. Whether the Hon'ble ITAT was right in not appreciating that the addition of ₹ 15,37,40,627/- made on account of interest free loans advanced by the assessee to its subsidiaries, amounts to transfer of income without transferring assets u/s. 60 or 61. Also, the transactions has been done to avoid and/ or reduce the tax liability by means of settlement as per the decision of the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detailed explanation furnished by the assessee was not accepted by the assessing officer, who, by his order dated 28.11.2013, ordered the addition of an amount of ₹ 15,37,40,627/- to the total income of the assessee under the head Income from other sources . 6. The assessee appealed and the Commissioner of Income Tax (Appeals) and by his order dated 28.11.2014, accepted the case of the assessee and ordered the deletion of the amount of ₹ 15,37,40,627/-. 7. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT) and the ITAT, by order dated 27.07.2015 dismissed the Revenue's appeal and upheld the deletion order by CIT(Appeals). Hence, the present appeal on the aforesaid substantial question of law. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as the fact that the subsidiaries have not earned any interest as such from the interest-free loan advanced by the assessee. He relied on several decisions, including the decision in CIT-7 vs. Reliance Communications Infrastructure Limited (2012) 21 Taxmann 118 (Bom), to submit that this appeal may be dismissed. 10. Mr. Nanivadekar also relied on The Principal Commissioner of Income Tax vs. Sesa Resources Ltd. (Earlier known as VS Dempo Co Pvt Ltd) Tax Appeal No.57 of 2016, decided on 16.08.2017 , in which, the Division Bench of this Court, has rejected the Revenue's contention that even notional interest can be assessed to tax or that the grant of interest-free loans was not based on any commercial expediency. Mr. Naniv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) has concluded that the loans were advanced for commercial expediency. 13. The ITAT, upon considering the contentions of the Revenue has affirmed the findings of fact recorded by the CIT (Appeals). Thus, in this case, there are concurrent findings of fact that are themselves based on the material on record. Therefore, even if we proceed on the basis that the commercial expediency test is indeed required to be applied to the case at hand, such test stands fulfilled based on the concurrent findings of fact recorded by the two authorities. 14. The ITAT has also relied on the decision of the Gauhati High Court in Highways Construction Co. (P.) Ltd. vs. Commissioner of Income-tax (1993) 199 ITR 702 (Gau), in which it is held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee advances it to a sister concern. It all depends on the facts and circumstances of the respective case. For instance, if the directors of the sister concern utilize the amount advanced to it by the assessee for their personal benefit, obviously it cannot be said that the money so advanced is a measure of commercial expediency. However, money can be said to have been advanced to a sister concern for commercial expediency in many other circumstances. Where a holding company, has a deep interest in its subsidiary, and the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purpose, the holding company would ordinarily be entitled to a deduction on the interest of the borrowed loa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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