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TMI Blog2022 (10) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly the ground of appeal taken by the appellant is dismissed. - ITA No. 5809/Del/2019 - - - Dated:- 23-9-2022 - SHRI KUL BHARAT , JUDICIAL MEMBER Appellant by : None Respondent by : Shri Mrinal Kumar Das , Sr. DR ORDER PER KUL BHARAT , JM : The present appeal filed by the assessee for the assessment year 2015- 16 is directed against the order of Ld. CIT(A)-21, New Delhi dated 06.05.2019. The assessee has raised following grounds of appeal:- 1. That on the facts and circumstances of the case and in law, the Ld. C1T(A) has erred in upholding the addition of Rs. 20,00,000 and that the order passed by the Ld. C1T(A) is bad in law. 2. That on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in understanding the facts circumstances of the case and relied on non-applicable judicial precedents. 3. That on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in passing the order just based on surmises conjectures and ignored the factual details submitted during assessment/appellate proceedings. 4. That on the facts and circumstances of the case and in law, the Ld.CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt was deposited in the bank account of the lendor company one day before. Therefore, the assessee could not prove the creditworthiness and genuineness of the transaction. He therefore, submitted that the finding of the authorities below may be confirmed. 8. I have heard Ld.Sr.DR and perused the material available on record and gone through the orders of the authorities below. I find that Ld.CIT(A) has decided the issue by observing as under:- 6.5. From the facts on record, it is noted that Mr. Ashok Kumar Grover was not related in any official capacity with the above company nor having any business relation. In the statement recorded by the AO, Mr. Rahul Jain, Director of the Company, specifically stated that the appellant Mr. Ashok Kumar Grover is his family friend and loan has been given to him without interest and without any collateral to meet his personal financial needs. From the above Resolution, it is further noticed that no time period has been specified in the above Resolution with regard to repaving the loan and the appellant has been given liberty to repay the same as and when the funds are available with him. In this connection, it is pertinent to mention her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.7 Considering the factual matrix of the case, it is pertinent to mention here that loan has not been defined in Income tax Act, therefore, reliance is placed on definition as defined in Oxford English Dictionary as per which a thing lent; something the use of which is allowed for a time, on the understanding that it shall be returned or an equivalent given, a sum of money lent on these conditions and usually with interest. However considering the fact on record, it is inferred that in the present case as per Resolution passed by the Board of Directors of the company, no time-frame has been defined / fixed for the appellant to repay the loan. Liberty has been granted to the appellant to repay the loan as and when the funds are available with him. Though Resolution has been passed by the company but there is no confirmation on the part of the appellant to repay the loan within any time frame. It is also worth mentioning that lending company has advanced interest free loan to the appellant whereas it has interest bearing liability in the form of CC limit of Rs. 1,31,31,950/-, thus advancing of interest free loan is quite peculiar in such circumstances. It is also not clear as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd (1971) 82 ITR 166 etc. The High Court and the other authorities should have examined the purpose for which the assessee advanced the money to its sister concern, and what the sister concern did with this money, in order to decide whether it was for commercial expediency, but that has not been done. It is true that the borrowed amount in question was not utilized by the assessee in its own business, but had been advanced as interest free loan to its sister concern. However, in our opinion, that fact is not really relevant. What is relevant Is whether the assessee advanced such amount to its sister concern as a measure of commercial expediency. Learned counsel for the Revenue relied on a Bombay High Court decision in Phaltan Sugar Works Ltd. Vs. Commissioner of Wealth-Tax (1994) in which it was held that deduction under Section 36(1)(iii) can only be allowed on the interest if the assessee borrows capital for its own business. Hence, it was held that interest on the borrowed amount could not be allowed if such amount had been advanced to a subsidiary company of the assessee. With respect, we are of the opinion that the view taken by the Bombay High Court was not correct. The corr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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