2014 (1) TMI 1490

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..... way of loan at a rate of 12% immediately after a loan of Rs.77.50 lacs was taken at a much higher rate - There was no business expediency and the amount which was obtained at a higher rate of interest was passed on to the sister concern at a lower rate of interest without utilizing it for its own business - The Tribunal has not considered this part of the order of the Tribunal - The issue has been restored for fresh adjudication.
Dr. Dhananjaya Yeshwant Chandrachud,CJ And Hon'ble Dilip Gupta,JJ. For the Appellant : Shambhu Chopra For the Respondent : Krishna Agrawal ORDER The appeal by the revenue under Section 260-A of the Income Tax Act, 1961 arises from a decision of the Income Tax Appellate Tribunal dated 23 August 2013. The ass .....

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..... close relatives to whom interest was charged at much lower rates. Accordingly, a disallowance was made. 5. In appeal, the CIT (A) held that the Assessing Officer had failed to establish any nexus between the funds borrowed with the funds which were furnished as loans to substantiate that borrowed funds were diverted at a lower rate of interest to sister concerns other than for business purpose. The Assessing Officer was found to have made a disallowance on the basis of a general method which was adopted for computing average rate of interest paid and average rate of interest received. 6. In particular, the CIT (A) considered the loans which were granted to two parties, namely M/s Neuromed Imaging Centre (P) Ltd. and M/s Shree Krishna Ship .....

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..... deleting the disallowance. It was found that the Assessing Officer had not brought out any fact to prove the nexus between the funds borrowed with the funds which were utilized for advancing loans to establish that the funds which were borrowed were diverted at a lower rate for non business purposes. In view of the detailed consideration of the records by the CIT (A), upon which the finding was entered, this reasoning of the Tribunal does not warrant any interference. The Tribunal has followed its own order for A.Y. 2008-09. The revenue did not file an appeal for that year since the tax effect was below the threshold. Be that as it may, we are satisfied that the view which has been taken by the Tribunal in respect of this part of the order .....

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