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TMI Blog2019 (6) TMI 1537X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal in [ 2018 (7) TMI 1476 - ITAT CHENNAI] When the cash system of accounting was adopted by the Assessee, an Investment Company, whose business is only to borrow and lend or invest, the same cannot be said to be not in the business interest or commercially expedient for the purpose of business and the concept of ;Matching Principles;, which has been applied by the Assessing Authority and the CIT (A) in the present case, was not really applicable. It is not for the Revenue authorities to substitute their own wisdom or notion about the rate of interest agreed to between the parties, including the group companies and, as such, the finding of fact about commercial expediency or absence thereof is a finding of fact, out of which, no substantial question of law can be said to be arising, requiring our consideration under Section 260A - Decided in favour of assessee. - ITA No.2895/Chny/2018 - - - Dated:- 20-6-2019 - Shri George Mathan, Judicial Member And Shri S. Jayaraman, Accountant Member Appellant by : Shri Abijit Rakshit, JCIT Respondent by : Shri Veerabadram Prasanth, Adv. ORDER Shri S. Jayaraman, The Revenue filed this appeal against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the sine qua non for allowability of expenditure is the nexus between the income and expenditure reported for the year in question, as applicable in terms of section 36 and 37 of the Act. 6. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) be set aside and that of the AC restored. 3. The ld. Departmental Representative presented the case on the lines of grounds of appeal. Per contra, the ld. Authorised Representative of assessee submitted that the order of the Hon'ble ITAT in ITA No.994/Chny/2017 for AY 2013-14 dated 19.07.2018 in the assessee s case was subject matter of appeal before the Hon ble Jurisdictional High Court of Madras, which in its order in TCA No.166 of 2019 dated 21.02.2019, dismissed the Revenue s appeal. Therefore, he pleaded that the Revenue s appeal be dismissed. 5. We heard the rival submissions and gone through the relevant material on record. The relevant portion of the order of the Hon ble Jurisdictional High Court, supra, is extracted as under: 6. We have heard the learned counsel for the parties and also gone through the order impugned of the learned Tribunal. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction claimed under section 5 (e) of the Madras Plantations Agricultural Income #126;tax Act, 1955. While considering the issue, the court was pleased to observe that in principle there is no distinction between interest paid on capital borrowed for the acquisition of a plantation and interest paid on capital borrowed for the purpose of an existing plantation. Both are for the purpose of the plantation. The court further observed that the payment of interest on the amount borrowed for the purpose of the plantations when the whole transaction of purchase and the working of the plantations was viewed as an integrated whole was so closely related to the plantations that the expenditure could be said to be laid out or expended wholly and exclusively for the purpose of the plantations. 8. We may also gainfully refer to the judgment of the Calcutta High Court in CIT v. Rajeeva Lochan Kanoria (1994) 208 ITR 616. The learned court was considering section 36 (1) (iii) and was pleased to observe as under (page 620) : The only enquiry that is to be made is whether the payment of interest was in respect of capital borrowed for the purpose of the assessee s business or profession. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es it to a sister concern. It all depends on the facts and circumstances of the respective case. For instance, if the Directors of the sister concern utilize the amount advanced to it by the assessee for their personal benefit, obviously it cannot be said that such money was advanced as a measure of commercial expediency. However, money can be said to be advanced to a sister concern for commercial expediency in many other circumstances (which need not be enumerated here). However, where it is obvious that a holding company has a deep interest in its subsidiary, and hence if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the assessee would, in our opinion, ordinarily be entitled to deduction of interest on its borrowed loans. 9. We are of the considered opinion, that, as a matter of fact, no substantial question of law arises in the present case, because, it is essentially a finding of fact as to whether the lower interest paid on the borrowings made by the assessee company from the sister concerns or the group companies is for the purpose of its business or not. Whether it is commercially expedient ..... X X X X Extracts X X X X X X X X Extracts X X X X
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