TaxTMI 
TaxTMI 
2008 (11) TMI 282
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....sidiary company of the assessee company as per the following details: ------------------------------------------ V.No. Date Cheque No. Amount ------------------------------------------ BP-1063 29-09-2004 318027 50.00 ------------------------------------------ BP-1063 29-09-2004 318028 50.00 ------------------------------------------ BP-1063 29-09-2004 318029 50.00 ------------------------------------------ BP-1063 29-09-2004 318030 50.00 ------------------------------------------ BP-1063 29-09-2004 318032 17.00 ------------------------------------------ BP-1063 29-09-2004 50.00 ------------------------------------------ BP....
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....t that it has given advances to subsidiary company as per the directions of BIFR in as much as no specific provision in IT Act as such has been given by BIFR for any exemption authority. Secondly, before me, the AO has argued that nowhere any such direction has been given by BIFR that assessee company has to advance these loans as interest-free to subsidiary company and that interest will not be disallowed under the Act. More so, the position is clear in the light of judgment of Hon'ble Punjab & Haryana High Court as narrated by the AO. In my opinion, the AO has given detailed reasoning for making such addition and the same is upheld as the facts of case law cited by counsel is different from the facts of the appellant company." 6. Before us, appellant submitted that, it is a case where disallowance of interest has been made without appreciating the facts and circumstances of the case and provisions of law. It was further submitted that, in the instant case, advances to a subsidiary company had been made on account of commercial expediency and that too, under obligation in terms of the rehabilitation scheme sanctioned by BIFR. A copy of the scheme has been placed in the paper bo....
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....satisfy MA that the physical progress and all aspects of cost of the scheme/means of finance of the scheme is complied with as per schedule. To this end, the company shall furnish to MA such In formation and data as may be required by it at quarterly intervals. Any financial shortfall arising out of the delayed implementation of the schedule or for any other reason shall be met by the company/promoters without any recourse to financial institutions/banks or seeking any further reliefs/concessions including margin money from them than what has already been provided for in the scheme within a period not exceeding three months." 10. It is therefore, clear that, the assessee was obliged to provide funds to the subsidiary company under a rehabilitation scheme sanctioned by BIFR. In other words, these funds were provided by the assessee to its subsidiary company, namely M/s Haryana Telecom Ltd., as per the scheme for rehabilitation sanctioned by the BIFR Obviously, the appellant can be said to have a deep interest in the rehabilitation of the business of the subsidiary company. Ostensibly, the funds have been put to use by the subsidiary for its business. It is thus a case where funds....
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.... made to para 3 of the order dt. 27th Aug., 2001). In view of the fact stated above, no interest-free advance has been made to a subsidiary company, but the amount has been paid under legal obligation in view of the order of BIFR. Moreover, as aforesaid, Haryana Telecom Ltd. is a subsidiary of your assessee company and the amount has been paid in addition to the order of BIFR for commercial expediency and, as such, is fully covered by the judgment of the apex Court in the case of S.A. Builders Ltd. vs. CIT(A) & Anr. (2006) 206 CTR (SC) 631 : (2007) 288 ITR 1 (SC). Copies of orders of BIFR referred to above are enclosed." 12. In fact, this submission was also reiterated before CIT(A). However, both the authorities below overlooked the above factual position and, held the disallowance of the interest to be tenable. We are of the respectful opinion that, judgments of jurisdictional High Court in the case of the appellant for asst. yrs. 1991-92, 1992-93, 1993-94 and 1996-97 are no doubt binding but only when the facts of the case of the appellant in the instant year and, those years are identical. In the present case, it is undisputed that the money has been advanced by the assessee....
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....e on the judgment of apex Court in the case of CIT vs. Modi Industries 40 STC 173 (SC) wherein it has been held that, order of apex Court is to be followed, even if the Hon'ble High Court has sent the reference for a particular purpose. In view thereof, we are of the considered opinion that in the instant case, disallowance had been made by the lower authorities without appreciating the facts of the case and the provisions of law and hence the disallowance of interest of Rs. 32,98,500 is therefore, directed to be deleted. 14. Ground No. 3 of the grounds of appeal is in respect of additions amounting to Rs. 1,87,78,000 and Rs. 92,14,000 on account of waiver of interest by banks and interest on debentures respectively under s. 41(1) of the Act. The CIT(A) in this regard noted that the appellant company was declared a sick company under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 vide order of BIFR dt. 28th June, 1999. It has been further noted that, in such order, BIFR has directed CBDT/Director of IT (Revenue) to consider to exempt/grant relief from application of provisions of s. 41 (1) of the Act. The application filed by the appellant before CBDT....