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TMI Blog2020 (7) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... in furtherance of main objects of its business and, therefore, in our considered view, the assessee is very much entitled for claim of interest paid on borrowed capital. We, accordingly, set aside the findings of the CIT(A) and direct the Assessing Officer to delete the addition. - Decided in favour of assessee. - Shri Bhavnesh Saini, Judicial Member, And Shri N.K. Billaiya, Accountant Member For the Assessee : Shri Salil Kapoor, Sr. Adv For the Revenue : Ms Rakhi Vimal, DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order of the CIT(A) - 1, New Delhi dated 13.10.2015 pertaining to A.Y 2012-13. 2. The solitary ground by the assessee which was argued before us by the ld. counsel for the assessee relates to the disallowance of interest of ₹ 82,51,230/- u/s 36(1)(iii) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short]. 3. Briefly stated, the facts of the case are that assessee company is engaged in the business of production, generation, storage, transmission, distribution and supply of electricity and power and energy. The assessee company is a wholly owned subsidiary of ACB (INDIA) Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll rejects based thermal are managed by ACBIL. The memorandum of ACBIPL reads as under: 1. To carry on the business of production, generation, storage, transmission distribution and supply of electricity (bulk and retail), power and ei 2. To promote, own, acquire, erect, construct, establish, operate, m takeover power companies, hold share in power companies, and use the e electricity generation capacities owned by any generators, including an title or interest therein as well as power purchase agreement, for venture with other for promoting and to own, acquire, develop mines for power generation and other end uses in any parts of Indi and elsewhere through tenders, license from appropriate authority all such acts and things necessary in connection with the same company may from time to time think properly to be acquired for and to set up, promote, operate and carry on the business of coa washeries, liquefied natural gas for supply of fuel to stations and to 3. To take over, acquire, operate, maintain, manage and use companies power plants, cogeneration power plants, energy conservation proj houses, and transmission and distribution systems for generation, d transmission, and suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral decisions e.g.Eastern Investments Ltd. v. CIT[1951] 20 ITR 1, CITv.ChandulalKeshavlaldt Co. [1960] 38 ITR 601 etc. The expression commercial expediency is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure, if it was incurred on grounds of commercial expediency. It has been repeatedly held by this Court that the expression for the purpose of business is wider in scope than the expression for the purpose of earning profits vide CIT v. Malayalam Plantations Ltd, [1964] 53 ITR 140, CIT v. Birla Cotton Spg. AWvg. Mills Ltd. [1971] 82 ITR 166 etc. It is important to mention that even the investments made in share capital of the subsidiary companies by the assessee could not be called the investments for non-business purpose because in the memorandum and the articles of the company, one of the objects the assessee-company mentioned is investments in shares of other companies by the assessee We rely on the Hon'ble Supreme Court judgment in the case of SA Builders vs CIT 288 ITR 1 - SC, where i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance u/s 37(1) of the Act also. 10. The assessee carried the matter before the ld. CIT(A) but without any success. 11. Before us, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 12. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and through her written submissions, placed reliance on several judicial decisions. 13. We have given thoughtful consideration to the orders of the authorities below as well as the judicial decisions relied upon by both the rival representatives. The undisputed fact is that this is not the first year of business of the assessee. It is also not in dispute that the subsidiary companies of the assessee are also engaged in the same business of production, generation, transmission and distribution and supply of electricity. 14. The Assessing Officer himself has observed at para 5.1 of his order that the assessee has paid interest on the borrowings as on 01.04.2011. The ratio laid down by the Hon'ble Supreme Court in the case of SA Builders 288 ITR 1 squarely applies on the facts of the case wherein the Hon'ble Supreme Court has held as under: Where it is obvious that the ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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