TaxTMI 
TaxTMI 
2013 (11) TMI 111
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....olding that unrecognised gratuity fund is allowable u/s. 37(1), when the case is hit by the provisions of section 40A(9) and especially when the assessee failed to comply with the provisions of section 36(1)(v)." 4. After hearing both the sides, we find this issue is covered in favour of the assessee and against the Revenue in I.T.A. No. 198/Hyd/2011 in assessee's own case for A.Y. 2006-07 order dated 16.12.2011 wherein this Tribunal held as follows: "3. After hearing both the parties, we are of the opinion that similar issue came up for consideration in assessee's own case for assessment year 2002-03 in I.T.A. No. 349/Hyd/2006. The Tribunal decided the issue in favour of the assessee vide its order dated 15.2.2008 by holding as follo....
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....ment of the Madras High Court in the case of Premier Cotton Spinning Mills Ltd. (supra) and the judgement of the jurisdictional High Court in the case of Warner Hindustan Ltd. (supra), it has to be allowed. 5. We have carefully gone through the judgement of the jurisdictional High Court in the case of Warner Hindustan Ltd. (supra). In the case before the jurisdictional High Court, the Provident Fund was not approved by the CIT. The Andhra Pradesh High Court after referring to the judgement of the Bombay High Court in Tata Iron & Steel Co. Ltd. v. D.V. Bapat, ITO (1975) 101 ITR 292, and the judgement of the Supreme Court in Metal Box Company of India Ltd. vs. The Workmen (1969) 73 ITR 53, held that the amount paid towards an unapproved gr....
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.... "6. We have heard both the parties and perused the material on record. If the assessee diverted its interest bearing funds to the sister concern for any purpose other than business purpose, then this impugned interest to be disallowed. In other words, if the assessee used the sister concern as a conduit to divert interest bearing funds to the personal advantage any director or relative of directors of the assessee company, then this interest to be disallowed. The burden is on the assessee to prove that the payment of interest is genuine. Further, once it is borne out of the record that the assessee had borrowed certain funds on which liability to pay interest is being incurred and on the other hand, certain amounts had been advanced to si....
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.... in spite of heavy interest payable on fresh borrowings and pending loans on which the assessee incurring interest liability, still there is a justification to advance loans to sister concerns for non business purpose and accordingly, such interest payment cannot be allowed as a deduction. However, in the present case, as seen from financial statement of assessee's, there is availability of own fund and reserve and surplus in the impugned assessment years. These funds are more than sufficient to make investment in the subsidiary company. This can be seen from the following table: (a) Financial year 2000-01 2001-02 2002-03 (b) Funds available for utilization after Considering the impugned investment (Rs. in lakhs) 151.21 135.66 29.27 ....
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....1 for A.Y. 2006-07 order dated 16.12.2011 wherein this Tribunal answered this issue in favour of the assessee and against the Revenue, which reads as follows:- "15. We have heard both the parties. In this case the assessee purchased 3,13,119 shares of M/s. Arandy Laboratories Ltd. for a cost of Rs. 14,55,21,444 that is worked out to Rs. 464.74 per share. By this, the assessee acquired the entire assets and liabilities of the above company. However, there was excess of liabilities over the assets which works out to Rs. 5,57,38,146. According to the assessee this nothing but the value of technical know-how of bulk drugs, value of licences, sale agreement with MNC held by the assessee and other business and commercial rights which are intan....