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TMI Blog2022 (4) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, same was heard together and are being disposed off by this consolidated order. 4. Before us, ld. counsel for the assessee submitted that both the issues are covered in favour of the assessee by the order of the Tribunal for the AYs 2011-12, 2012-13 & 2013-14 and order of Hon'ble High Court in the case of assessee wherein similar disallowance made u/s 36(1)(iii) on same set of facts in the Revenue's appeal against the deletion of said disallowance has been confirmed by the Hon'ble High Court. Thus, issue of disallowance made u/s 36(1)(iii) is squarely covered in favour of the assessee. 5. Further, insofar as disallowance u/s 14A is concerned, the same is also covered by the decision of the Tribunal in AY 2013-14 on similar facts and reasoning as are present in the present appeals. 6. The facts, in brief for AY 2014-15, are that the appellant has taken secured and unsecured loan aggregating to Rs. 1847.20 crores on which interest of Rs. 195.10 crores was paid. The assessee has given utilisation of loan for business purpose and also has shown interest free loan and advances to related entities. Before the AO, the assessee submitted that these were purely business advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in properties and investment in partnership firm. Ld. CIT (A) on perusal of facts had given a categorical finding that assessee had sufficient interest free funds in the form of capital and reserves & surplus, which are much more than the interest free advances/investments and also following the ITAT decision in assessee's own case deleted the addition by observing as under :- "6.4 On perusal of the above decision of the Hon'ble ITAT, it is observed that it been held that if the appellant has sufficient interest free funds to meet the Capital expenditure/CWIP and to make investments, no disallowance u/s 36(1)(iii) of the Act can be made. In view of this, a reasonable presumption can be made that investments have been made out of the appellant's own funds. Reliance in this regard is placed on the decision of Bombay High Court in the case of Reliance Utilities 313 ITR 340 and of Delhi High Court in the case of Eicher Goodearth in ITA NO. 54/2000. It is also observed that the issue has been decided in favour of the appellant in the case of the appellant itself for AY 2011-12 by Hon'ble ITAT Delhi in ITA No. 1998/Del/2016. Respectfully following the decisions referred ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding to the circumstances of the case, No businessman can be compelled to maximize its profits. The authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. We have to see the transfer of the borrowed funds to the sister concern from the point of view of commercial expediency and not form the point of view whether the amount was advances for earning the profit?........" 4. The ITAT, to whom the Revenue appealed, affirmed the decision of the CIT(A). 5. The grounds of commercial expedience are now well established in tax jurisprudence. The position of the CIT(A) and its affirmation by the ITAT are essentially based upon a fact appreciation that the assessee forewent interest. As to whether there was an element of sacrifice and if so, for what purpose, is not for the Court to consider, given that the loans obtained by the assessee were for its business purposes. 6. There is nothing on record to dispel/undermine the findings of the lower Appellate Authorities that commercial expedience dictated the nature of the transactions. 7. No question of law arises." Distinguishing feature in AY 15-16 wrt 36(1)(iii) --as already stated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee's submissions and permitted annual amortization of the initial lease consideration, as advance rent. The assessee here relied on the "consistency" rule enunciated in Radhasoami Satsang (supra). The Supreme Court observed, in that case that: " ... where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 19. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter-and if there was not change it was in support of the assesses-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-Tax in the earlier proceedings, a different and contradictory stand should have been taken." This Court notices that there cannot be a wide application of the rule of consistency. In Radhasomi Satsang's case (supra) itself, the Supreme Court acknowledged that there is no res judicata, as regards assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, the strict rule of res judicata as envisaged by section II of the Code of Civil Procedure, 1908 has no application. As a general rule, each year's assessment is final only for that year and does not govern later years, because it determines the tax for a particular period. It is, therefore, open to the Revenue/ Taxing Authority to consider the position of the assessee every year for the purpose of determining and computing the liability to pay tax or octroi on that basis in subsequent years. A decision taken by the authorities in the previous year would not estop or operate as res judicata for subsequent year (videMaharana Mills (P.) LId. v. ITO; Raja Bahadur Visheshwara Singh v. CIT; Instalment Supply (P.) Ltd. v. Union of India; New Jehangir Vakil Mills Co. Ltd. v. CIT; Amalgamated Coalfields LId. v. Janapada Sabha; Devilal Modi v. STO; Udayan Chinubhai v. CIT; M.M. Ipoh v. CIT; Kapurchand Shrimal v. Tax Recovery Officer; CITv. Durga Prasad More; Radhasoami Satsang v. CIT; Society of Medical Officers of Health v. Hope; Broken Hill Proprietary Co. LId. v. Broken Hill Municipal Council; Turner on ResJudicata, 2nd Edn., Para 219, p. 193). [Emphasis supplied]."( emphasis supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. In order to analyze the claim of the assessee it is essential to go through the provisions of section 36(1)(iii)." 12. Thereafter, AO has discussed the relevant provisions of section 36(1)(iii) and case laws. Nowhere, he has rebutted that the payment of loans and advances were not for the purpose of business or are not in the nature of business advances. What AO is suggesting that the assessee should have first adjusted the advances given to DLF Ltd. for the purchase of plots and land with the loan taken from DLF Ltd. Solely on this reason AO made the proportionate admissible deduction of interest and worked out the disallowance of interest expenditure. Ld. CIT (A) has categorically found that it is not in dispute that the assessee had huge interest free surplus funds and no disallowance u/s 36(1)(iii) can be made. We find that, this proposition that, if assessee has sufficient interest free funds, then no disallowance can be made if the sufficient interest free funds exceeds advances given, has been upheld by the decision of Tribunal in assessee's own case after taking note of judgements of Hon'ble jurisdictional High Court and Hon'ble Bombay High Court. Not only that, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d continue to remain in the business. This provision cannot be construed as enable an assessee to burden the business with interest even while taking the amount initially borrowed for the business, but subsequently taken out of the business by diverting it as interest free loans or loans on lower rate of interest." 16. Ld. CIT (A) has given same reasoning which has been reproduced in para 5.3 of his order. Thus, there is no material change either on the facts or no new material has brought on record so as to divert from findings of earlier years, therefore, following the binding precedence in the earlier assessment years which are applicable in the nature of mutatis mutandis on this issue, the ground raised by the Revenue is dismissed. 15. Similar disallowance u/s 14A is made. It is an admitted fact that here, the assessee has received exempt dividend income of Rs. 6,31,308/-, out of which the assessee had made suo moto disallowance of Rs. 5,45,245/-. Ld. CIT (A) restricted the disallowance to the extent of exempt income, therefore, we do not find any reason to interfere in such a finding in the light of the judgment of Hon'ble Delhi High Court in the case of Joint Investments Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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