TaxTMI 
TaxTMI 
2014 (2) TMI 473
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....he findings of the CIT (A) for the AY 2010-11 under dispute, it is noticed that the CIT (A) had, in fact, dealt with the issue elaborately and decided the issue in favour of the assessee. The relevant finding of the CIT (A) reads as follows: "4.4........there is merit in the appellant's subjection and the disallowance made u/s 14A of the Act read with rule 8D of the Rules is deleted.'' 2.2 Since the above issue of disallowance u/s 14A is decided in favour of the assessee, this ground is dismissed as not maintainable. 2.3. As the issue raised in these appeals is common and pertaining to the same assessee, for the sake of convenience and brevity, both the appeals were heard together and disposed of in this consolidated order. 3. Briefly stated, the assessee is a private limited company engaged in property development and construction. The assessee filed its returns of income for the AYs 2009-10 and 2010-11 on 27.02.2010 and on 14.10.2010, declaring total incomes at Rs.6,30,67,080/- and Rs.42,95,02,180/- respectively. Subsequently, the assessee had filed revised returns of income,declaring total incomes at Rs.3,99,99,150/- and Rs.54,91,82,893/-on 23.10.2010 and 26.2.2011 r....
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.... the normal course of its business and for the purpose of business only. It was, further, contended that the CIT (A) had failed to consider the various case laws relied on by the assessee which were squarely applicable to the facts of the assessee's case. It was also contended that the CIT (A) had failed to take cognizance of the findings of Hon'ble earlier Benches of this Tribunal in the assessee's own case for the earlier assessment years on a similar issue. To drive home his points, the learned AR had placed strong reliance on the findings of Hon'ble earlier Benches of this Tribunal on an identical issue in the assessee's own case in (i) ITA Nos.182, 183, 382 & 383 (BANG)/2010 dated 3.12.2010 for the AYs 2002-03 to 2005-96; and (ii) ITA Nos.346/Bang/2012 & 1126/Bang/2011 dated 7.11.2013 for the AYs 2007-08 & 2008-09. 5.1. On the other hand, the learned DR submitted that the issue has since been dealt with comprehensively coupled with comparative figures in the appellate orders by the CIT (A), the issue now raised by the assessee deserves to be rejected. It was, further, pleaded by the learned DR that the findings of the CIT (A) backed with judicial views on a similar issue; t....
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....ed into by the assessee with its sister-concerns, we have noticed that the purpose for which monies advanced, terms and conditions have been explicitly included therein. It is also apparent that the advances made were in the course of business and for the purposes of commercial expediency only. Moreover, it is noteworthy to mention here that as on 31.3.2009, the balance of BLFPL in the books of the assessee had reduced to Rs. 30.28 crores from Rs.32.33 crores as on 31.3.2008 and it was further reduced to Rs. 27.26 crores as on 31.3.2010. 6.2. Likewise, Shri Raja Bagmane had purchased various plots of agricultural lands in his individual capacity which was subsequently transferred to the assessee. To enable Shri Raja Bagmane to purchase such agricultural lands on behalf of the assessee, amounts were advanced by the assessee after duly entering into agreements with him wherein the terms and conditions have been duly dwelt with. Moreover for the AY 2009- 10, the balance of Shri Raja Bagmane in the books of the assessee has reduced from Rs.24.44 crores as on 31.3.2008 to Rs.21.88 crores as on 31.3.2009. 6.3. In the case of Bagmane Builders Private Limited [BBPL], it was noticed t....
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....s and development of properties. In this connection, our reference was drawn to page 3 of the agreement dated 13.11.2002 entered into between CDPL and the assessee wherein it has been termed that - "Whereas pursuant to the above, the first party [Chandra Developers] shall assemble the properties in the peripheries of Old Madras Road and other areas and construct commercial/residential complex on the lands so acquired as per the designs approved by the second party [appellant]." [Source: Page 18 of PB AR] 6.7. It was, further, submitted by the learned AR that the intention of the above agreement was to acquire the property of M/s. NGEF Limited on Old Madras Road by auction for which the assessee had advanced the money to CDPL. Though CDPL being successful in the bidding process, the claims raised by NGEF's bankers and employees led to legal dispute which was decided by the Hon'ble Supreme Court in favour of the bankers/employees. To substantiate the above narration, the learned AR produced the following documents for our perusal in the form of Paper Book: (i) Bid application; (ii) Copy of DD for bid amount (iii) Copy of DD for deposit of balance amount with Karnata....
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....o its sister concerns and others as a measure of commercial expediency.' The above conclusion had been arrived at by the earlier Benches based on the judgment of the Hon'ble Supreme Court in the case of S.A. Builders v. CIT reported in 288 ITR 1 (SC). For appreciation of facts, we would like to reproduce the relevant portions of the judgment of the Hon'ble Court, verbatim, as under: "the interest-free loan was given to the sister company (which is a subsidiary of the assessee) as a measure of commercial expediency, and if it was, it should have been allowed. The expression 'commercial expediency' is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as business expenditure if it was incurred on grounds of commercial expediency." 6.12. Further, it is evident that the loans were advanced to most of the sister concerns/Director of the assessee right from the AY 2004-05. Therefore, it was a running account which sister concerns/director of the assessee had with it. Even going by the impugned order of the CIT(A), it is ....
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..... 6.14. The following judicial pronouncements also affirm the above view: (i) D & H Secheron Electrodes Pvt. Ltd v. CIT - (1983) 142 ITR 528 (MP) "Under s. 36(1)(iii), to sustain a claim for deduction of the amount of interest, all that is necessary is that the capital must have been borrowed by the assessee; secondly, it must have been borrowed for the purpose of the business or profession of the assessee and, thirdly, that the assessee should have paid that amount by way of interest. In the instant case, the Tribunal has not given any finding holding that the conditions required to be satisfied under s. 36(1)(iii) were not fulfilled. The only ground, for disallowing a part of the interest, given by the Tribunal was that the assessee had not chosen to charge interest on advances made to the three concerns. The contention urged on behalf of the Department, in the instant case, that a part of the capital borrowed by the assessee was not for the purpose of the business, cannot be considered because that is not the finding of the Tribunal. All that the Tribunal has found is that the assessee was not entitled to claim deduction in respect of a part of the interest, as the asse....