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TMI Blog2019 (8) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO u/s 153A for want of search at its premises. Once the assessee has accepted the search and seizure operation and consequent assessment orders in earlier years, the assessee cannot challenge the same for the year under consideration. This ground is, accordingly, dismissed. Disallowance of interest u/s 36(1)(iii) - advance to subsidiary companies for the business exigencies - HELD THAT:- Non-current investments, which were a appearing in A.Y 2014-15 at ₹ 9.53 crores came down to ₹ 6.62 crores in A.Y 2015-16 and ₹ 3.91 crores in A.Y 2016-17. This, in addition to interest free funds available with the assessee in the form of share capital and reserves and surplus is sufficient for making interest free funds i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv For the Revenue : Ms.Pramita M. Biswas, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: The above two separate appeals by the assessee are preferred against two separate orders of the Commissioner of Income Tax [Appeals]-26, New Delhi dated 02.08.2018 pertaining to assessment years 2015-16 and 2016-17 respectively. Since common grievances are involved in both these appeals, they are being disposed of by this common order for the sake of convenience and brevity. 2. The first grievance relates to validity of the assessment framed u/s 153A r.w.s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act']. Second grievance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) of the Act, the facts on record [facts of A.Y 2015-16 are considered] show that during the course of scrutiny assessment proceedings, the Assessing Officer found that the assessee has debited finance charges of ₹ 55,28,266/- as against preceding year s expenses at ₹ 4,73,243/-. The Assessing Officer was of the opinion that such increase in finance cost, without there being any corresponding increase in business activity, does not confirm to utilisation of loan fund for business and, accordingly, the assessee was asked to explain the justification of claim of finance charges of ₹ 55,28,266/-. 7. In its reply, the assessee relied upon its submissions for A.Y 2010-11 and further stated that there has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, it is found that total expenses booked in the profit loss account except finance cost and depreciation comes to ₹ 2,53,46,284/-only, out of which ₹ 46,90,779/- remained outstanding as evident from the comparative analysis of balance sheet figures of trade payables and other current liabilities as on 31.03.2014 and as on 31.03.2015. Hence, maximum interest bearing loan fund to the extent of ₹ 2,06,55,505/- (₹ 2,53,46,284/- less Rs,46,90,779/-) can only be considered as utilized for the purpose of business which is 25.10% only (Rs,2,06,55,505/₹ 8,22,87,329*100) of total interest bearing fund of ₹ 8,22,87,329/- In view of the above discussion even if, it is presumed that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was having sufficient own funds to make investment and, therefore, on this count also, no disallowance can be made. 13. Per contra, the ld. DR strongly supported the findings of the lower authorities. It is the say of the ld. DR that it is not the objective of the appellant company to give loans to subsidiary companies. The ld. DR further contended that funds may have been utilised by subsidiary company in their respective businesses but the assessee has not utilised the borrowed money for the purposes of its businesses. Hence disallowance is justifiable. 14. Sources and application of funds can be understood from the following chart: 15. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d money for their respective businesses. In fact, in earlier A.Ys, i.e. A.Y 2013-14, assessment was framed u/s 153A r.w.s 143(3) of the Act and no such disallowance was made by the Assessing Officer. Considering the facts in totality and also the past history of the assessee, we set aside the findings of the CIT(A) and direct the Assessing Officer to delete the disallowance of interest u/s 36(1)(iii) of the Act. This ground raised by the assessee in both the appeals is allowed. 20. Before closing, as mentioned elsewhere, we have considered the facts of the A.Y 2015-16, though the quantum may differ, the other appeal is, accordingly, disposed off. 21. In the result, both the appeals filed by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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