9911796707
TMI Blog2013 (7) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... to the tune of Rs. 1.05 crores and to Sagar Textile Mills to the tune of Rs. 18.40 crores. On calling for the explanation for interest-free loans and duly considering the submissions of both sides, the Assessing Officer disallowed the interest to the extent of Rs. 18,66,000 of the interest-free loans advanced to both the parties on the ground that the same was not incurred for business expenses. This decision of the Assessing Officer came to be challenged before the Commissioner of Income-tax (Appeals), which set aside the order of the Assessing Officer and deleted the addition of Rs. 18,66,000. It sought to rely on the precedent decision of the Appellate Tribunal given in the case of Torrent Financiers v. Asst. CIT reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier years. The Commissioner of Income-tax (Appeals) had also taken note of the fact that there was sufficient funds available with the assessee-respondent on which there was no interest liability that had been incurred. In such circumstances, relying on the case of Torrent Financiers (supra), it found that the disallwoance was not justifiable. The Tribunal on noting these details, in terms held that there was nothing contrary that could be brought on record by the Department. The assessee's equity share capital Rs. 3.85 cores and reserve and surplus of Rs.5.52 crores also were noted by the Tribunal. It found that the interestfree funds available with the assessee was far greater than the loan advanced to the sister concerns an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evidence brought on record by the Department for the Tribunal to hold otherwise than what has been concluded by way of any material, we hold that the issue is appropriately concluded in favour of the assessee and against the Revenue. We may refer to the judgment of the apex court at this stage given in case of S. A. Builders Ltd. v. CIT reported in [2007] 288 ITR 1 (SC) where the question was whether interest on funds borrowed by the assessee to give an interest-free loan to sister concern should be allowed as deduction and the apex court ruled thus (pages 7 and 8): "We have considered the submission of the respective parties. The question involved in this case is only about the allowability of the interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case. No businessman can be compelled to maximize its profit. The income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits." Accordingly, the question is answered in favour of the assessee by the apex court. In this tax appeal it is to be specified here that considering the material on record and keeping in view substantial interest-fre ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
