TaxTMI 
TaxTMI 
2014 (12) TMI 981
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.....T. The assessment was taken under scrutiny and the income of the assessee was assessed by the Assessing Officer as per para 10 of its order. 3. Being aggrieved by the order passed by the A.O., appeal was preferred before the CIT(A). By order dated 25.05.1994, the CIT(A) partly allowed the appeal. Against the said order of the CIT(A), appeal was preferred before the Appellate Tribunal. By impugned judgment and order dated 21.06.2000, the Appellate Tribunal partly allowed the appeal filed by the revenue. Hence, this appeal. 4. We have heard learned counsel for the Revenue as well as the assessee. The appeal was admitted vide order dated 21.03.2001, which reads as under: "1. Revenue has proposed the following two questions which according to it are substantial questions of law and which require tobe raised and the appeal to be admitted in relation to the same. "(A) Whether, the Income Tax Appellate Tribunal was justified in law and on facts in confirming the order of the CIT (Appeals) who has allowed the claim of investment allowance u/s. 32A for an amount of Rs. ....
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....e the Tribunal. Moreover, the Assessing Officer, who is the author of the impugned assessment order, dated 29th March, 1994 represented the Department before the first appellate authority and it is not possible for us to accept that attention of first appellate authority was not drawn to this factual discrepancy. In light of the concurrent findings of two appellate authorities, no substantial question of law arises out of the order of the Tribunal dated 21st June, 2000. Hence Appeal is admitted in so far as question no. 2 as framed by the Court is concerned and the appeal is dismissed in so far as proposed question no. 1 is concerned." 5. Insofar all the question No.2 i.e. question of law raised is concerned, the same is already concluded by a decision of this Court rendered in Tax Appeal No.401/2000 decided on 06.05.2011, which is reproduced hereunder; "1. All these three appeals under section 260A of the Income Tax Act, 1961 (the Act) arise out of common order dated 31st March, 2000 made by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' in ITAs No.832/Ahd/98, 833/Ahd/98 and 834/Ahd/98 for the assessment years 1992-93, 1993-94 and 1994-95 r....
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....596 wherein the Assessing Officer had disallowed sum of Rs. 1,61,69,397/as according to him the assessee had made advances to three concerns out of the interest bearing funds. Therefore out of the interest claimed by the assessee 14% on the said advances, being the rate on which the assessee had claimed interest on borrowings utilised for purposes of business came to be disallowed by the Assessing Officer. The three concerns to which advances were made are as under: (a) Gujarat Narmada Auto Ltd. (GNAL) (b) Gujarat Narmada Finance and Investment Co. Ltd. (GNF & IC) (c) Narmada Education and Scientific Research Society (NF & SRS) 6. For the said assessment year before the Tribunal it was submitted that similar disallowances were made right from assessment year 1990-91, but the disallowance was deleted in appeal. It was emphasized that the assessee had sufficient funds of its own and, therefore, there was no occasion to divert borrowed funds for granting advances. Statements showing internal accrual of income from year to year ....
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.... counsel for the assessee filed a detailed chart to show that profit for each of the years and share capital far exceeded the advances made by the assessee to the three concerns and there was no need to divert borrowed funds. The Tribunal held thus: "6.2 The facts and circumstances in the three years under appeal have been admitted by both the parties to be identical with facts and circumstances considered by the Tribunal in assessment year 1995-96. The assessee has also furnished evidence to show that it had sufficient funds of its to make advances to the three concerns. No diversion of borrowed funds has been established. Therefore, consistent with the order of ITAT for the assessment years 1995-96, we direct that disallowance of interest made u/s. 36(1)(iii) be deleted in all the three assessment years and this ground of appeal is allowed." 8. Mr. K.M. Parikh, learned standing counsel for the appellant revenue placed strong reliance upon the decision of the Supreme Court in the case of S.A. Builders Ltd. v. Commissioner of Incometax (Appeals) Chandigarh and Another, (2007) 1 SCC 781, to submit that the test in s....
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....t and immediate benefit, but voluntarily and on grounds of commercial expediency and in order to indirectly facilitate the carrying on of the business. The above test in Atherton case2 has been approved by this Court in several decisions e.g. Eastern Investments Ltd. v. CIT, (1951) 20 ITR 1, CIT v. Chandulal Keshavlal & Co, (1960) 38 ITR 601, etc. 26. In our opinion, the High Court as well as the Tribunal and other Income Tax Authorities should have approached the question of allowability of interest on the borrowed funds from the above angle. In other words, the High Court and other authorities should have enquired as to whether the interestfree 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. 27. 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 a business expenditure if it ....
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....ear 199596, revenue has preferred appeal before this Court being Tax Appeal No.770 of 1999. However, in the said appeal no question has been raised nor formulated challenging the order of the Tribunal in relation to the said issue. In the circumstances, the revenue appears to have accepted the decision of the Tribunal on the said issue in relation to assessment year 199596; hence the order of the Tribunal has become final qua the said issue. The Supreme Court in the case of Radhasoami Satsang, Saomi Bagh, Agra v. CIT, (1992) 1 SCC 659, has held thus: "16. We are aware of the fact that strictly speaking resjudicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year." In the circumstances, once the revenue has accepted the ....