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TMI Blog2021 (12) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the Assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. Coming to the contention of the Ld. D R that the Assessee was not having sufficient interest-free funds available to the extent of investment and therefore the addition made under Section 36(1)(iii) of the Act on account of disallowance of interest expenses is liable to be sustained. We find the Hon ble Apex Court in S. A. Builders Ltd. Case (supra) itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation introduced in Section 92B of the Act with effect from 1st April, 2002 by the Finance Act (2012) wherein it is clarified that the expression International Transaction shall include guarantee and held the same as retrospective.As per judgment of the Hon ble Madras High Court, the addition can be made qua corporate and bank guarantee . Considering the undisputed fact to the effect that Hon ble Bombay and Madras high Court in the cases referred above held the Corporate Guarantee as International Transaction , we do not find any reason to interfere with the findings of the Ld. Commissioner for partly sustaining the addition under consideration and therefore the same is upheld. Consequently the Appeal of the Assessee is dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under Section 36(1)(iii) of the Act on account of disallowance of interest expenses as made by the AO in this case. 5. On the other hand, the ld. AR supported the impugned order relevant to the issue under consideration and also relied upon the following decisions: (i) S. A. Builders Ltd. Vs. CIT 288 ITR 01 (SC) (ii) CIT Vs. Spencers Co. Ltd. Co. Ltd. (2013) 359 ITR 644 (Mad.); (ii) CIT Vs. Phil Creations Ltd. Anr. 244 CTR (Bom.) 226; (iii) CIT Vs. Tulip Star Hotel Ltd. (2011) 338 ITR 482 (Del.); (iv) Kejriwal Enterprises Anr. Vs. CIT (2003) 260 ITR 341 (Cal) 6. Having heard the parties and perusing the material available on record, the Ld. Commissioner deleted the addition of ₹ 2,18,26,74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2006 dated 14.12.2006, the AO/TPO is directed to delete the addition made on account of notional interest on advances given to its sister concerns. 6.2 We may observe that the Hon ble Apex Court in S. A. Builders Ltd. Case (supra) dealt with the identical issue in broader terms and observed that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the Assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. 6.3 The Ld. Commissioner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid judgments of the Hon ble High Courts also,the contention of the Ld. DR is untenable. 6.6 In conclusion the ld. Commissioner thoroughly analyzed the peculiar facts and circumstances and deleted the said addition by following the judgment of the Hon ble apex Court rendered in the case of S. A. Builders Ltd. Case(supra). Hence in our considered view, the impugned order relevant to the instant appeal does notsuffer from any infirmity and therefore no interference is called for. Consequently the appeal of Revenue is liable to be dismissed, hence ordered accordingly. ITA. No. 7302 (Del) of2019(Assessee s Appeal) 7. The Assessing Officer made the addition of ₹ 73,69,830/- qua Transfer Pricing Adjustment on account of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Transaction shall include guarantee and held the same as retrospective. As per judgment of the Hon ble Madras High Court, the addition can be made qua corporate and bank guarantee . 8.2 Considering the undisputed fact to the effect that Hon ble Bombay and Madras high Court in the cases referred above held the Corporate Guarantee as International Transaction , we do not find any reason to interfere with the findings of the Ld. Commissioner for partly sustaining the addition under consideration and therefore the same is upheld. Consequently the Appeal of the Assessee is dismissed. 9. Resultantly, both the cross appeals filed by the Revenue Department and the Assessee are dismissed. Order pronounced in the open Courton : ..... X X X X Extracts X X X X X X X X Extracts X X X X
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