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TMI Blog2007 (10) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, the Ld. Counsel for the assessee has filed a consolidated chart identifying the grounds of appeal in assessee s appeal in ITA Nos. 2505 and 2506/M/04 with the submissions that most of the issues are covered by the orders of the Tribunal pertaining to earlier assessment years. We however preferred to adjudicate them groundwise. 3. Ground Nos. 1 and 2 relate to disallowance of interest paid on interest- free advances to the subsidiary company. 4. During the course of hearing, the Ld. Counsel for the assessee has submitted that the advances were given to subsidiary companies out of the surplus funds but there is no direct evidence in this regard. He however agreed that this issue be re-adjudicated in the light of the judgment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be held to be expenditure incurred wholly and exclusively for earning income from dividend and deduction under section 57( iii ) is not allowable. Since in the instant case, the assessee has made the investments to have a controlling interest in its subsidiary companies, the deduction of the interest paid on borrowed funds cannot be allowed as the revenue expenditure either under section 37(1) or under section 57( iii ) of the Income-tax Act. 7. Having heard the rival submissions and from a careful perusal of record, we find that the assessee s main business activity is not to make investment in shares of the subsidiary companies but to have a controlling interest therein. The assessee has made the investment of the borrowed funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. 9. Ground No. 5 in both the appeals relates to disallowance of payments made to clubs. In this regard, it was again submitted by the Ld. Counsel for the assessee that this issue is covered by the judgment of the Jurisdictional High Court in the case of Otis Elevator Co. (India) Ltd. v. CIT [1992] 195 ITR 682 (Bom.) which the jurisdictional High Court has observed that payment of club fees was made with a view to enable the assessee to improve its business relations and prospectus. It was also contended that this issue is also covered by the order of the Tribunal in the case of Sterlite Industries (India) Ltd. v. Addl. CIT [2006] 6 SOT 497 (Mum.) in favour of the assessee. The Ld. Departmental Representative simply placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenses. In this regard it was contended that the identical disallowances were made in assessment year 1991-92 which were later on deleted by the Tribunal in ITA No. 1652/M/95. Copy of the order of the Tribunal is placed on record. The Ld. Counsel for the assessee further contended that the similar disallowance was also made in assessment year 1996-97 and the same was also deleted by the Tribunal following the aforesaid order of the Tribunal for assessment year 1991-92. Copy of the orders of the Tribunal are placed on record. 14. On perusal of the orders of the lower authorities, we find that disallowance on account of conveyance expenses was made by the CIT(A) following its order for assessment year 1996-97 in which the identical ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1998-99 after treating the same as prior period expenses. 19. During the course of hearing, the Ld. Counsel for the assessee has invited our attention that in earlier year, i.e., 1996-97 the identical disallowance was made but the Tribunal has restored the matter back to the file of the Assessing Officer with the direction to readjudicate the issue and to allow it if the liability is crystallized in the relevant assessment year. Since the facts are not clear in this regard, in the instant case, we therefore following the order of the earlier year of the Tribunal and set aside the order of the CIT(A) and restore the matter to the file of the Assessing Officer to readjudicate the issue and to allow the claim of the assessee if he su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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