9911796707
TMI Blog1991 (1) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal filed before the Appellate Tribunal also met with the same fate. Thereafter, the Commissioner of Income-tax, in exercise of his powers under section 263, issued a notice dated July 8, 1976, calling upon the petitioner to show cause why the order of the Income-tax Officer in so far as he failed to disallow the interest payment attributable to the capital borrowed but diverted to the loans advanced to the firm of M/s. Desai Shah Construction Co. of Anand, Desai Shah Construction Co., Nadiad, Desai Shah Construction Co., Baroda, and Swastik Construction Co., for non business purposes. The Commissioner, by his order dated July 22, 1976, held that the Income-tax Officer should have held that the loans and advances made to the said firms we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax had escaped assessment. The petitioner was called upon to furnish necessary information as regards return of income of the company in respect of which it was assessable for the said year. The petitioner has filed this petition challenging the said notice and has also prayed for a writ of mandamus restraining the respondents permanently from taking any further action pursuant to the said notice. The main contention taken in the petition is that the Income-tax Officer had no material before him to entertain the belief that any income had escaped assessment and, therefore, he had no reason to entertain the belief required by section 148(2) of the Act. During the course of hearing of this petition, learned advocate for the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of the company. It is further stated in the said notice that no interest was charged on these loans and, therefore, the Income-tax Officer had committed an error in allowing the claim for deduction in respect of the interest payments amounting to Rs. 1,16,976 on borrowed money. The finding which was recorded by the Commissioner was that the amounts outstanding were the loans advanced by the petitioner to those firms for non-business purposes, and that the petitioner had not charged interest with a view to reduce the income of the company. The Tribunal did not agree with the finding recorded by the Commissioner and held that merely because no interest was charged, the advances to the associate firms could not be treated as non-busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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