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TMI Blog2018 (10) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of making investments cannot be disallowed under Section 36(1)(iii) of the Act. Apart from the incongruities in the reasoning and calculations made by the Assessing Officer referred to in the order of the Commissioner of Income Tax (Appeals), which have been accepted by the Tribunal, the issue raised is covered against the Revenue by the decision of the Supreme Court in S.A. Builders Limited versus Commissioner of Income Tax and Another, (2006 (12) TMI 82 - SUPREME COURT) - decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Net Interest paid (A-B) 678.28 D. Average investments 1,16,523.06 E. Total funds as per Books i.e. total of Balance 1,48,282.00 F. Net Interest allocated to average investment (C*D/E) i.e. addition for (sic) 533.01 4. Before the Commissioner of Income Tax (Appeals) it was pointed out by the respondent-assessee that one of the main objects for which the respondent-assessee was established was to purchase, acquire, hold, trade and further to dispose of any right, stake or controlling interest in shares, stocks, debentures etc. Thus making investment was a part of respondent-assessee's business. Further, the respondent-assessee was engaged in the business of hospitality, hotel management services and investment in companies de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. 5,906,250 706,355 8 DLF Pleasure Hotels Pvt. Ltd. 5,821,187 630,800 9 Saket Courtyard Hospitality Pvt. Ltd. 35,800,000 2,287,247 10 Guardian International Pvt. Ltd. 5,000,000 231,781 11 Heritage Resorts Pvt. Ltd. 10,000,000 463,562 12 Lodhi Property Co. Ltd. 680,000,000 42,706,575 13 DLF Recreational Foundation (Debtors) 2,535,332 - 2,052,021,046 28,00,29,158 " He observed that this irrefutable evidence was ignored and not dealt with by the Assessing Officer. 6. The Tribunal vide order dated 9th April, 2018 has affirmed findings of the Commissioner of Income Tax (Appeals) deleting addition of ₹ 5,33,01,263/- made by the Assessing Officer as being contrary to law and in particular Section 36(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the money is expended, not of necessity and with a view to direct and immediate benefit, but voluntarily and on grounds of commercial expediency and in order to indirectly facilitate the carrying on of the business. The above test in Atherton case [(1925) 10 TC 155 : 1 KB 421 : 132 LT 288 (CA)] has been approved by this Court in several decisions e.g. Eastern Investments Ltd. v. CIT [(1951) 20 ITR 1 : AIR 1951 SC 278] , CIT v. Chandulal Keshavlal & Co. [(1960) 38 ITR 601 : AIR 1960 SC 738] , etc. 26. In our opinion, the High Court as well as the Tribunal and other Income Tax Authorities should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the High Court and other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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