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TMI Blog2009 (10) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer in the A.Y. 1996-97 on the ground that assessee has advanced interest bearing funds to sister concerns. Facts of the case are that during the course of assessment proceedings, for the Assessment year 1996-97 1997-98 Assessing Officer found that the assessee has advanced ₹ 102.5 crores to sister concerns free of interest. It is noted by him that these sister concerns are subsidiaries of the assessee company and transactions had taken place with them during the financial years 1995-1996. The assessee had taken loan from the financial institutions and advances were given to the sister concerns as under: a. Paid for acquisition of international business |(export business) on going concern basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs for the company and a large property to be developed for the company and a large property to be developed for the company s own use or for development as commercial property. The company to whom such amount was advanced spent major portion of amount advanced for acquisition of assets almost entire portion of which was enjoyed by the company for it business purposes including housing offices/staff, car parking training centers etc. without any cost/ 40.00 e. Amount advanced to a Research Foundation having object to carry out research related to collection of blood, blood transfusion and other related areas. UAs the company was in the business of manufacture of blood collection bags as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in Abhishek Industries (2006) 286 ITR 001 for the proposition that where loans are advanced interest free to sister concerns, onus is on assessee to show that borrowings were used for business purpose. In addition to this, he relied on the order of the Assessing Officer. 6. Against this, the learned AR for the assessee raised preliminary issue that Revenue effect in this case is nil as assessed income and returned income, both are loss and therefore following the decision of Hon'ble Delhi High Court in CIT Vs. Manglam Ricinus Limited (2008) 174 Taxman 186 Delhi appeal is not maintainable. In the alternative, Learned A.R. submitted that issue is covered by the decisions of this Tribunal in the case of ITO Vs. Yashvant S. Tejan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the revenue is concerned would be nil. In the event the question has any impact on subsequent years, we leave it open to the revenue to raise it in the succeeding years, if need arises. 6. Learned counsel for the revenue submits that the tax effect is not required to be seen but the tax effect on the issue involved is to be seen. This precisely what the Tribunal has done. We do not find any error in the view taken by the Tribunal. This judgment was followed by ITAT, Ahmedabad Bench in DCIT Vs. Sanbhav Media Limited ITA No. 2733/A/2006, assessment year 2003-04 pronounced on 24-04-2009, wherein, it is held that if returned income and assessed income both are negative, then appeal filed by the department in limine is not maintaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue relied on the decision of Hon'ble Punjab and Haryana High Court in Abhishek Industries (supra). This decision was followed by Hon'ble Punjab High Court in Munjal Sales Corporation Vs. CIT (2008) 298 ITR 288 (P H) which was subsequently reversed by Hon'ble Supreme Court in Munjal Sales Corporation V/s. CIT (2008) 298 ITR 298 (SC). Therefore, the decision of Hon'ble Punjab and Haryana High Court in Abhishek industries (supra) is no longer a good law. 10. For the sake of convenience, we reproduce para 13 to 16 from our decision in Yashwant S. Tejani s case as under: 13. He also relied on the following judgments. I. Shree Digvijay Cement Co. Ltd V/s CIT 138 ITR 45 (Guj) II. CIT V/s Gopikrishna Muralidh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the proposition that presumption is that interest free advances were given out f interest free funds available with the assessee. 16. We have considered rival submissions and perused the material on record. In our considered view Learned Commissioner of Income Tax(Appeals) was justified in deleting the addition. It is because interest free advances to Kokilaben Tejani Mahesh S. Tejani were old balances and no disallowance in the past has been made. Secondly, Shri. Manish Tejani is an employee and interest free advances are given to him for commercial expediency. Thirdly, loan taken from bank are apparently used for purchasing plant and machinery as explained by Ld. A.R. Notwithstanding assessee has interest free funds and Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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