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TMI Blog2020 (10) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate order for AY 2005-06 which has finally been affirmed by the Tribunal. In such a scenario, no fault could be found in the impugned order and no disallowance would survive against the assessee for the year under consideration. Therefore, by confirming the stand of Ld. CIT(A), we dismiss the appeal. - I.T.A. No.3264/Mum/2010 And I.T.A. No.3265/Mum/2010 And I.T.A. No.3266/Mum/2010 And C.O. No.23/Mum/2011 Arising out of ITA No. 3264/Mum/2010), C.O. No.24/Mum/2011 (Arising out of ITA No.3265/Mum/2010 - - - Dated:- 5-10-2020 - C.O. No.25/Mum/2011 (Arising out of ITA No.3266/Mum/2010 05-10-2020 Shri P. P. Bhatt, President And Shri Manoj Kumar Aggarwal, AM For the Assessee : Ms. Aarti Sathe-Ld. AR For the Revenue : Shri V. Vinod Kumar -Ld. DR ORDER PER BENCH 1. Aforesaid appeals by revenue for Assessment Years [in short referred to as AY ] 2002-03 to 2004-05 contest separate order of learned first appellate authority on certain common grounds of appeal. The facts as well as issues are stated to be pari-materia the same in all the 3 years and therefore, the appeals were heard together and are now being disposed-off by way of this consolidated or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar disallowance in AY 2002-03, the assessee was subjected to reassessment proceedings. 4.2 The assessee had debited interest on bank overdraft for ₹ 300.92 Lacs and other interest of ₹ 147.59 Lacs for the year under consideration and claimed deduction of the same u/s 36(1)(iii). The assessee being resident corporate assessee was stated to be engaged in trading of rights of cinematographic films and television programme software etc. It procured rights in respect of various genres of films from third parties such as producers, license holders etc. and sold the same in its entirety to its associate enterprise namely SGL Entertainment Ltd. (SGL). 4.3 The assessee borrowed inter-corporate deposits (ICD) from another entity namely M/s Star India Private Limited (SIPL) and also availed bank overdraft from the bank for the purposes of carrying out of its business. Accordingly, the interest on ICDs and Bank-overdraft was claimed as deduction u/s 36(1)(iii). During the course of assessment proceedings, the assessee submitted that SIPL was not a related party within the meaning of Section 40A(2) of the Act and further, SIPL was a resident in India for tax purposes. The int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed by coordinate bench by observing as under: - 4. We have considered rival contentions and found from the record that the financial statements of assessee evidenced utilization of borrowed funds for procuring rights in respect of various genres of films from third parties for sale to SGL Entertainment. As such borrowed funds on which interest has been paid were utilized for purpose or business entitling assessee to claim deduction u/s 36(1)(iii). Regarding A.O. s observation that the act of borrowing funds from SIPL is not in business expediency and with a view to avoid taxability in the hands or the assessee, we found that funds were borrowed from SIPL for business purpose, the expenses being wholly and exclusively for the purpose of business based on commercial expediency. Interest expenses were incurred for purpose of assessee's own business, profits of which are chargeable to tax under the provisions of the Act. Further whether a particular expenditure is necessary considering commercial expediency has to be decided from the point of view of businessman alone and not by the Revenue authorities. For this purpose reliance can be placed on decision of Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate order for AY 2005-06 which has finally been affirmed by the Tribunal. In such a scenario, no fault could be found in the impugned order and no disallowance would survive against the assessee for the year under consideration. Therefore, by confirming the stand of Ld. CIT(A), we dismiss the appeal. 8. The Ld. AR has submitted that since issue on merits is squarely covered in assessee s favor, the assessee do not wish to press for its cross-objections. Hence, the same stand dismissed being infructuous. 9. Resultantly revenue s appeal as well as assessee s crossobjections stands dismissed. ITA No.3265/Mum/2010 CO. No.24/Mum/2011 (AY 2003-04): 10. Facts are pari-materia the same in this year. An assessment was framed u/s 143(3) r.w.s. 147 on 19/11/2009 wherein the assessee was saddled with interest disallowance of ₹ 283.17 Lacs. Upon further appeal, Ld. CIT(A) held that reopening u/s 147 was not sustainable since original assessment was framed u/s 143(3) and there was application of mind by Ld. AO on the issue of interest disallowance during scrutiny assessment proceedings. Consequently, the issue on merits was not adjudicated. The said adjudication h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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