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TMI Blog2012 (8) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... naging Nursing Homes/Hospitals specially with respect to Cardio Vascular Care. It filed its return of income for the Assessment Year 2007-08 on 31.10.2007 declaring an income of ₹ 7,13,10,790/-. The A.O. completed the assessment u/s 143(3) on 29.12.2009, assessing income at ₹ 7,60,620/-, where interalia he has disallowed interest on borrowed capital as well as u/s 14A of the Income Tax Act, 1961. Aggrieved the assessee carried the matter in appeal before the CIT. The First Appellate Authority deleted the disallowance on proportionate interest made by the A.O. He also restricted the disallowance made u/s14A. Aggrieved both the assessee and the Revenue are in appeal before us. 3. We have heard Mr. R.S.Negi, Sr.D.R. and Mr.Hiren M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other the Chandigarh Bench of the Tribunal in ITA 1432/Ch./2010 order dt. 28th Feb.,2011 had followed its earlier order and confirmed the same disallowance. He argued that the precedence set by the Co-Ordinate Bench of the Tribunal in the assessee's own case has to be followed. He pointed out that the assessee in his explanation has also submitted that disallowance can be made on proportionate basis and had given reasons for the same. Thus he submits that it cannot argue otherwise. He further submitted that the Commissioner of Income Tax (Appeals) has accepted additional evidence from the assessee and without confronting the A.O. with this additional evidence, had adjudicated the matter. Hence he submitted that the order of the Ld.CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled for the remand report from the Assessing Officer on the evidences admitted by him, and hence there can be no grievance of not having an opportunity. 6. In reply the Ld.D.R. tried to distinguish the decision of the Delhi High Court by submitting that it was a case where interest free advance was given prior to taking a loan. 7. On the assessee's appeal, the ld.counsel for the assessee though not leaving this ground ultimately submitted that he is not pressing the same in view of the smallness of the amount. 8. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on perusal of the papers on record and the orders of the authorities below we hold as follows:- 9. The loans in question, on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier Benches of the Tribunal have followed the decision of the Hon'ble P&H High Court in the case of Abhishek Industries. The proposition laid down in this judgement are at variance with the judgement of the Hon'ble Supreme Court in the case of S.A.Builders Ltd. Vs CIT (S.C.)(2007) 288 ITR 1 has held as follows:- 22. In our opinion, the High Court in the impugned judgment, as well as the Tribunal and the income-tax authorities have approached the matter from an erroneous angle. In the present case, the assessee borrowed the fund from the bank and lent some of it to its sister concern (a subsidiary) as interest free loan. The test, in our opinion, in such a case is really whether this was done as a measure of commercial expediency. 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pediency, but that has not been done. 32. It is true that the borrowed amount in question was not utilized by the assessee in its own business, but had been advanced as interest free loan to its sister concern. However, in our opinion, that fact is not really relevant. What is relevant is whether the assessee advanced such amount to its sister concern as a measure of commercial expediency. 35. We agree with the view taken by the Delhi High Court in CIT v. Dalmia Cement (B.) Ltd. [2002] 254 ITR 377 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus applying the propositions laid down by the Hon'ble Supreme Court, we have to uphold the order of the First Appellate Authority. It is not the case of the Assessing Officer that the borrowings in question are not for business purposes. The A.O. has no material to disbelieve the claim of the assessee. Hence the assessee should succeed. 13. Even otherwise the interest free funds available with the assesse are ₹ 44.28 crores. The assessee has earned profit of ₹ 5.93 crores during the Assessment Year 2007-08. If depreciation of ₹ 2.88 crores is added, the cash accruals during the year would be ₹ 8.81 crores. The interest free advances are to the tune of ₹ 14.89 crores. The Hon'ble Bombay High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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