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TMI Blog2018 (4) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... ply because the holding company does not do the same business as that of the assessee. There is nothing material on record to brush aside the submission of the assessee that through MHICL the assessee acquired controlling interest in MMCL for furtherance of their business interest. The investment of the borrowed funds by the assessee in MHICL is for business purpose, as such, the interest expense is allowable u/s 36(1)(iii) of the Act. With this view of the matter, we hold that the interest expense claimed by the assessee is allowable u/s 36(1)(iii) and the AO will delete the same. - Decided in favour of assessee. - I.T.A. No. 3639/Del/2013, I.T.A. No. 3851/Del/2013 - - - Dated:- 25-4-2018 - Shri N. K. Saini, Accountant Member And Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee preferred appeal, learned CIT(A) by way of impugned order deleted the additions made u/s 40(a)(i) and 40(a)(ia) of the Act, while confirming the addition made on account of disallowance of interest paid on a loan taken for investment in foreign company. Assessee, therefore, preferred ITA No.3639/Del/2013 challenging the confirmation of the disallowance of interest of ₹ 2,48,23,536/- paid on the loan taken for investment in foreign company; whereas challenging the deletion of the addition of ₹ 2,19,86,179/- u/s 40(a)(i) and ₹ 25,95,80,873/- u/s 40(a)(ia) of the Act, Revenue preferred ITA No.3831/Del/2013. 4. Now coming to the appeal of the department for deletion of addition of ₹ 2,19,86,179/- u/s 40(a)(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount should be taxable in India. The parties who have rendered service to the appellant company outside India and are working as collection centres do not fall within the preview of section 195 because the amount of discount which is given to them are of rendering services outside India hence this amount is not taxable in India by an Indian exporter to a foreign agent operating overseas and is remitted direct to the agent. 6. Learned CIT(A) further observed that in respect of the addition u/s 40(a)(ia) of the Act for the Asstt. Year 2006-07, a coordinate bench of this Tribunal by order dated 16.12.2011 in ITA No.434/Del/2011 held the issue in favour of the assessee with the following observations: there is no Principal-Agent rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no dispute from the Revenue. Rule of consistency requires that in the absence of any change of circumstances, the earlier stand taken by the authorities in assessee s own case shall not be disturbed to take a different view. From that point of view, the findings of the learned CIT(A) while deleting these two additions, are perfectly legal and do not warrant any interference by this Tribunal. Hence, grounds of appeal in ITA No.3851/Del/2013 are liable to be dismissed and we direct accordingly. 9. Now coming to the addition of ₹ 2,48,23,536/- on account of the interest expenditure on the loan taken for investment in foreign companies in assessee s appeal, is concerned, the plea of the assessee is that inasmuch as the assessee is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n borrowed capital, as such, interest paid on funds borrowed for making investment is not a business expenditure allowable under Chapter IV-D. Learned AO further recorded that the assessee s contention that this expense is allowable as per the provisions of Section 36(1)(iii)of the Act and in the alternative, under the provisions of Section 57(iii) of the Act are not acceptable as the assessee s case does not fall within this Section. 11. Learned CIT(A) after extracting the observations of the learned AO recorded that,- Keeping in view of the above facts, I uphold the decision taken by the Assessing Officer and hence the addition made by the Assessing Officer ₹ 2,48,23,536/- on account of interest expenses is confirmed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Tribunal deleted the same and the Hon ble Bombay High Court held that the interest paid on the borrowing utilized for the purchase of shares by the assessee company for acquiring controlling interest as per the provisions of Section 36(1)(iii) of the Act. 14. The contention of the assessee before us is also that the investment in MHICL was made to have controlling interest in the said company for expansion of business operations in foreign country through MMCL and the expansion is visible with the increase of sale of the assessee by ₹ 1,84,00,390/- in the initial year, as such, the interest expense shall be construed for the purpose of business and is allowable u/s 36(1)(iii) of the Act. 15. In the absence of any dispute a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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