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TMI Blog2015 (8) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... r various purchases and, therefore, it could not be concluded that the interest-free advances given to group concerns, were not for business purposes. We find that these aspects have not at all been examined by the lower Revenue authorities and no findings have been recorded as to the purpose for which interest-free advances were given to group companies. The assessee's submissions are quite convincing that considering the restrictions imposed by the Land Acquisition Act, it had entered into various collaboration agreements. The Assessing Officer is required to record specific finding on these aspects before coming to the conclusion that the entire interest-free advance given to group concerns were not for business purposes. Thus restore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate correctly the facts of the case thereby coming to a conclusion which was untenable in the eyes of law. No disallowance of any amount was called for having regard to the facts and circumstances of the case. The submissions made on behalf of the assessee having not been properly appreciated and erroneous conclusion has been reached. The entire addition of ₹ 2,97,82,854 deserves to be deleted. That the impugned order passed by the learned Commissioner of Income-tax (Appeals) confirming the addition made to the returned income, is bad in law and against the facts of the case. 2. The assessee had filed its return of income on September 30, 2009, declaring loss of ₹ 14,65,34,601. Thereafter, the assessee filed a rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of various loans and advances. The assessee further submitted that it had made an investment of ₹ 20,05,64,120 in group companies. In addition to this investment, the company had also given interest-free advance to the group companies amounting to ₹ 1,68,43,58,666. The assessee also pointed out that apart from secured and unsecured loans, the company had on its disposal a sum of ₹ 1,02,16,46,857 in the shape of advance received from customers in the earlier years, which were interest-free advances and were utilised for giving loans and advance to the group companies for purchase of land and likewise the investment also represented the investment from the same source. Thus, the assessee's plea was summarised as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,97,82,854 2.5. In appeal, the learned Commissioner of Income-tax (Appeals) confirmed the Assessing Officer's action, inter alia, observing that the assessee-company had made investment in group companies of ₹ 20,05,64,120 to have a controlling stake on such companies. Besides, the assessee had given interest-free advance to the group companies of ₹ 1,68,43,58,566. He further pointed out that no benefit was shown to have been derived by the assessee from these investments and interest-free loans. There was no commercial expediency found in advancing interest-free loans and investments. Therefore, the interest-free loans and investments we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1. Learned counsel submitted that the assessee is a developer and deals in real estate business. During the year the company had entered into an agreement for development of land with DD infrastructure and other companies of the group for developing real estate project at Faridabad. He further submitted that under the Land Acquisition Act, single entity is restricted to purchase over certain restricted limit of land. In view of this restriction, the assessee advanced/borrowed money for business purposes to its group concerns for purchasing the plot of land and thus the amount was advanced to group concerns not for controlling interest in the company but for commercial expediency. He submitted that the findings of the learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that the aforementioned balances were with respect to collaboration agreement. 3.4. In the backdrop of these facts, learned counsel submitted that the decision of the hon'ble Supreme Court in the case of S. A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1 (SC) is squarely applicable because all the advances were for commercial expediency. 4. The learned Departmental representative submitted that investment in group companies was for acquiring controlling interest. 5. We have considered the rival submissions and have perused the record of the case. Both the lower Revenue authorities have proceeded with a premise that investments in group companies were made to have controlling interest in such companies and interest-fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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