9911796707
TMI Blog2016 (10) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 36(1)(iii) - Decided in favour of assessee. - I.T.A. No. 315/KOL/2014 - - - Dated:- 19-10-2016 - Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member For The revenue : Shri Rajat Kumar Kureel, JCIT, Ld. Sr.DR For The assessee : Shri D.S. Damle, FCA, Ld.AR ORDER Shri S.S. Viswanethra Ravi, JM :- This appeal by the Revenue is directed against the order dated 19-11-2013 passed by the Commissioner of Income Tax(Appeals), XII, Kolkata for the assessment year 2008-09. 2. In this appeal, the Revenue has raised the following effective ground:- 1. That on the facts in the circumstances of the case and as per law Ld. CIT(A) erred in deleting the addition amounting ₹ 11463036/- u/s 36(i) (iii). 2. That on the facts and in the circumstances of the case and as per law Ld. CIT(A) erred in deleting the addition of interest paid by the assessee on borrowed fund utilized for investment in subsidiary company. 3. That on the facts and in the circumstances of the case and as per law Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 157,17,97,006 69,54,93,396 Investment in Coats Coating India Ltd. (now DIC Coating India Ltd. 29,89,87,270 Nil 5. According to AO that the assessee has exhausted its entire own source towards acquisition / investment / expenditure for the purpose of the company and the assessee was not left with own sources to invest in the said subsidiary company. The AO held that the assessee uti l ized its own funds which resulted in earning of exempted income. In absence of specific calculation with reference to said investments, the AO opined that amount of ₹ 10,75,33,170/- has not been used for the purpose of business and average interest thereon was disallowed. Amount of loan as on 31.03.2007 ₹ 79,26,58,9671- Amount of loan as on 31.03.2008 ₹ 38,78,81,383/- Average of loan ₹ 59,02,70,175/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis to appellant's wholly owned subsidiary viz. DIC Coatings Limited (then known as Coates Coatings I. Ltd.) effective from 1.1.1998. As per the terms approved by the High Court the consideration for sale of coating business was entirely satisfied by the transferee by issuing its equity shares. As such it will be appreciated that no borrowed funds were utilized by the assessee for acquiring the shares of the wholly owned subsidiary. In the facts of the case it is amply clear that the shares were allotted to the appellant in consideration of sale of its coating business undertaking into its wholly owned subsidiary and accordingly the investments were not made out of interest bearing funds. As is apparent from the Investment Schedule, no fresh investments were made during the relevant assessment year 2008-09. The only investment in the books of the appellant as on 31 .03.2008 was shares in the' wholly owned subsidiary DIC Coating India Limited which was acquired in 1997-98. It is pertinent to submit that in the income-tax assessments upto AY 2005-06 the Assessing Officer in the regular assessment never disallowed interest with reference to investment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. Undisputedly no fresh investments were made in the year under consideration. In the circumstances when the fact permeating through the years is exactly the same, it is prayed that following the order passed by your Id. predecessor for the assessment year 2005 06, the interest of ₹ 1, 14,63,036/- disallowed by the AO under Section 36( 1) (iii) may kindly be deleted in full. In the light of the above discussion findings and perusing the entire facts of the case including the findings of the AO, i am inclined to agree with the contention of the A/R the factual matrix involved in the appellate order passed by my predecessor in appellant's own case for AY 2005-06 is pari materia to the facts involved in the relevant year under consideration, in the impugned order the Assessing Officer has categorically observed that the appellant has only single investment in its wholly owned subsidiary DIC Coating lndio Limited which was acquired in 1997. He has also noted the fact that the shares of the subsidiary were acquired pursuant to sale of coating business to the latter in terms of a Scheme of arrangement approved by Calcutta High Court. Hence, undisputedly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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