TMI Blog2024 (2) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Telecom business at the relevant time was very high and hence, it was a commercially expedient decision to invest in that business. Both the CIT(A) and the ITAT accepted assessee s view point that if the subsidiary company expands and progresses, assessee will be benefited by the same as the valuation and net-worth of assessee will also increase. Moreover, the transaction was approved and authorised by the Board of Directors in the normal course of business activities and hence, any interest paid on funds utilized for the purpose of such business activity is allowable expenditure under Section 36(1)(iii) - On facts also, it was concluded that assessee had an aggregate share holding of 64% in the subsidiary and, therefore, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) of the Income Tax Act, 1961, without appreciating the fact that the interest bearing funds were given to subsidiary company as interest free deposits in guise of share application money ? 6.2 Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT was justified in upholding the decision of the Ld. CIT(A) in deleting the disallowance of Rs. 1,25,00,000/- being upfront fees paid to Central Bank of India without appreciating the fact the fees were paid to obtain the loan not for its own business but was given to subsidiary company without any consideration ? 3. Assessee was engaged in the business of manufacture and trading of consumer electronics and home appliances, investments in shares and se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the impugned order pronounced on 31st May 2016 and it is this order which is challenged before us in this appeal. 5. It is the case of Revenue that interest bearing funds were given by assessee to its subsidiary as interest free deposits in the guise of share application money. Therefore, interest paid to Central Bank of India ( CBI ) which had advanced term loan of Rs. 500 Crores, to the extent of Rs. 12,87,36,636/- has to be disallowed. Revenue also submitted that since the upfront fees paid to CBI was for taking this term loan, which was given to its subsidiary as interest free deposit in the guise of share application money and not for assessess s own business, the upfront fee also should be disallowed. It is the case of Revenue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure claimed by assessee under Section 36(1) (iii) of the Act was unwarranted and consequently, upfront fee of Rs. 1,25,00,000/- paid to the CBI in respect of the loan of Rs. 500 Crores was also to be allowed as deduction. The CIT(A) and the ITAT arrived at finding of fact that the amount advanced to subsidiaries was for the business purposes as the same are linked with the business of the subsidiary in which assessee had deep interest. Moreover, the valuation of Telecom business at the relevant time was very high and hence, it was a commercially expedient decision to invest in that business. Both the CIT(A) and the ITAT accepted assessee s view point that if the subsidiary company expands and progresses, assessee will be benefited by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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