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TMI Blog2023 (2) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and there cannot be year to year basis explanation of commercial expediency of giving interest free funds, to its subsidiaries, by assessee. The fact that the revenue appeals stand dismissed in regard to the assessment years 2010-11 to 2012-13 by this Tribunal further, bolsters the findings of this Bench that the question of commercial expediency of the interest free loans attaining finality for previous assessment years, then for the present assessment year of 2014-15, the question of commercial expediency require no further adjudication. The order of FAA and of the AO are liable to be set aside. The appeal of assessee is allowed. AO is directed to delete the addition under the head Interest Free Loans and advances given to subsidiaries u/s 36(1 )(iii). - Decided against revenue. - ITA No. 3487 /Del/2018 - - - Dated:- 21-2-2023 - SH. G.S.PANNU, HON BLE PRESIDENT AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER For the Assessee : Sh. Pratap Gupta, CA For the Revenue : Sh. Vijay Kumar Kataria Sr. DR Date of Pronouncement: 21.02.2023 ORDER PER ANUBHAV SHARMA, JM: The appeal has been preferred by the assessee against the order u/s 250(6) of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt (Rs. Crore) Availability Reserves surplus 41.37 Current assets 98.29 It shows that entire loans to body corporate can not be lent out of reserves surplus Current liabilities 129.60 Non-current assets (other than Loans to Body corporate) 57.26 Total 170.97 Total 155.55 Loans to Body corporate (AY 2013-14) 26.66 5. It was also observed by Ld. AO that this table reveals that assessee company did not have enough funds to lend to the subsidiaries as bulk of its borrowed funds were invested in fixed assets, investment and debter and that is business activities. It thus, rejected the argument that the funds were lend to the subsidiaries out of surplus funds and went on to make addition, disallowing 60% of the interest and guarantee changes of Rs. 39,31,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Appeals) - 36, New Delhi {hereinafter referred to as Ld. CIT(A) }, has erred in law and on the facts and in the circumstances of the case in upholding the various additions / disallowances made in the Assessment Order dated 09.12.2016. Ground No. 2 The Ld. CIT(A) has erred in law and on facts and in the circumstances of the case in confirming the addition of Rs. 23,58,600/- under the head Interest Free Loans and advances given to subsidiaries u/s 36(1 )(iii) of the I.T. Act. Hence, the appellant prays that the above mentioned addition of Rs. 23,58,600/- upheld by the Ld. CIT(A) should be deleted. Ground No. 3 The appellant craves leave to add, amend, alter or omit any of the above grounds of appeal as the circumstances may warrant on or before the date of hearing. 8. The arguments of Ld. Counsel for the assessee and ld. Sr. DR were heard and the record has been perused. 9. On behalf of the assessee, Ld. Counsel contended that without giving any reason to distinguish the Ld. CIT(A) had not followed the orders of Ld. CIT(A) in appellant s own case. It was submitted the Ld. CIT(A) failed to appreciate that in para no. 3 of its order, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta High Court in Woolcombers of India Ltd. (supra) where a similar issue had arisen.. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcomber's case (Supra) the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle therefore would be that if there are funds available both in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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