ITAT affirms CIT(A) decision on investment source, dismisses Revenue's appeal, upholds order. (A)

The ITAT upheld the CIT(A)'s decision to delete the additions and disallowances made by the AO. The investment in the subsidiary company was determined to be from own funds, not borrowed funds, based on findings from a previous year's order and approval by the High Court. The ITAT found no issues with the CIT(A)'s decision and dismissed the Revenue's appeal, confirming the CIT(A)'s order.

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Issues:
1. Disallowance of addition under section 36(1)(iii).
2. Disallowance of interest paid on borrowed fund utilized for investment in subsidiary company.
3. Deletion of factual finding made by the AO based on available records.

Analysis:
1. The Revenue challenged the deletion of an addition under section 36(1)(iii) by the CIT(A). The AO disallowed interest on investment in a subsidiary company, stating it was not for business purposes. The assessee argued the investment was made from own funds. The CIT(A) referred to a previous order for AY 2005-06 where it was held that no borrowed funds were used for the investment. The shares were acquired as part of a scheme approved by the High Court. The CIT(A) deleted the addition based on these findings, which were upheld by the ITAT.

2. The Revenue contested the deletion of interest paid on borrowed funds used for investment in the subsidiary company. The CIT(A) found that the investment was made from own funds and not interest-bearing funds. The shares were acquired as part of a scheme approved by the High Court. The CIT(A) relied on the findings of the previous year's order and deleted the disallowance of interest. The ITAT upheld the CIT(A)'s decision, noting that the facts were the same as in the previous year.

3. The Revenue raised an issue regarding the deletion of a factual finding made by the AO. The CIT(A) based the decision on the previous year's order and found that no borrowed funds were used for the investment in the subsidiary company. The ITAT upheld the CIT(A)'s decision, stating that the facts were consistent with the previous year's findings. The appeal by the Revenue was dismissed, and the CIT(A)'s order was confirmed.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the additions and disallowances made by the AO, as the investment in the subsidiary company was found to be made from own funds and not from borrowed funds. The ITAT found no infirmity in the CIT(A)'s order and dismissed the appeal filed by the Revenue.

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