2014 (3) TMI 183

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....expenses on Inter Corporate Deposits [ICDs] made by the Assessing Officer on the ground of divergence of interest bearing borrowings funds to noninterest bearing ICDs ?" Brief facts stated are that for the Assessment Year 200506, the Assessing Officer passed an order of assessment, which was taken in revision by the Commissioner of Income tax. Besides other issues, he touched the issue of the assesse Company not accounting for interest on the inter corporate deposits, though the amount of such deposit in the hands of the assessee was interest bearing funds. The assessee raised two fold contentions one was that the amount of Rs. 44.48 lakhs [rounded off] was written off since the creditor agreed to return the principal sum of Rs. 1.50 Cro....

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....reducing daybyday and the company had no concrete future business plan. It was agreed by the both that they are ready to forgo interest portion, if principal amount of Rs. 1.5 Crore is paid by the company on or before 15.05.2005. In case of Satellite Management Services Limited, the company incurred losses of Rs. 2.46 Crores as on 31.03.2005 [page no. 78 of trhe paper book]. Accordingly, this company was not in good position to repay the interest or principal amount. The company became sick. The assessee borrowed the fund for the business purpose and paid the interest on it which is allowable u/s. 37 of the IT Act. The appellant had reason to no charge interest from two companies. Thus, we have considered view that no interference is req....