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TMI Blog2019 (11) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee should earn profit in assessment year under appeal in order to claim deduction of the expenditure. The assessee made investment in the group companies to take controlling interest in the group company. The assessee for that purpose has joined the JV and SVP also. It is not in dispute that assessee has borrowed money for business purpose and made investment in M/s. Minor Hotels Pvt. Ltd., and paid interest also. The genuineness of the payment of interest is not in dispute. Therefore, assessee is entitled for deduction of the interest in assessment year under appeal. The assessee made investment utilizing the borrowed funds for strategic business purposes and the amount borrowed have been utilised for business purpose only. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects Pvt. Ltd., that these loans were utilized for investment made in M/s Minor Hotels Pvt. Ltd., another group company of assessee. Assessee has claimed expenses of ₹ 30,35,945/- as business expenditure paid to above mentioned 05 parties. During the year under consideration, assessee has not shown any income from investment made in M/s Minor Hotels Pvt. Ltd. The assessee is a real estate company engaged in the business of development and construction of real estate projects as there is no business activity done during the year under consideration only unsecured loans are taken to made payment for old continuing unsecured loan claim interest expenses. Assessee s investment in M/s Minor Hotels Pvt. Ltd. is not comes under the category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sor, civil contractors, maintainers of residential, commercial and industrial buildings, colonies, hotels, mills etc., more specifically mentioned in the Memorandum of Association of the Company. The assessee company has made investments through equity participation in it's group companies which is evident from the balance-sheet. The assessee company is holding 32% of equity share capital and 100% of preference share capital issued by Minor hotels. It was submitted that it is in terms of the memorandum and articles of association of the assessee company that the assessee has as a matter of fact undertaken the hotel business by equity participation for having controlling interest in 'it's group companies with attending/consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject. The Ld. CIT(A), therefore, upheld the addition. 5. I have heard the Learned Representative of both the parties and perused the material available on record. 6. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and referred to Memorandum of Association [ MoA ] PB-17, in which, one of the business activity of the assessee is Hotels . He has submitted that assessee wanted to expand the business activities, therefore, made investment in group company and assessee has an idea to control the sectors for the purpose of business in the said hotel investments were made in shares of SVP. He has submitted that during the assessment year under appeal, assessee has int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been borrowed for the purpose of business (iii) the assessee must have paid interest on the said amount and claim it as deduction. 8.1. The Hon ble Calcutta High Court in the case of CIT vs., Rajeeva Lochan Kanoria [1994] 208 ITR 616 (Cal.) in which it was held as under : Held, that directorship is nothing but a vocation. The assessee was admittedly a director of several controlled companies. The activity of controlling, managing, administering and financing companies is nothing but a business/professional/vocational activity. A businessman, like the assessee in this case, did not purchase shares of different companies for acquiring controlling interest therein only for earning dividen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies were promoted as special purpose companies to strengthen and promote its existing business by combining different business segments and, therefore, the claim was fully allowable under section 36(1) (iii). The Revenue did not adduce any material to show that the borrowed capital was utilised by the assessee for non-business purposes. 8.4. Considering the facts of the case in the light of above decisions, it is clear that one of the object of the assessee company for which it was established are, to carry on business in Hotels also. The assessee during the year under consideration has earned interest on loan only. The assessee claimed that in pursuance of the objects, the assessee made investment in M/s. Minor Hotels P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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