TaxTMI 
TaxTMI 
2015 (2) TMI 155
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....l filed by the assessee against the order of the ld CIT (A)-IV Hyderabad dated 10.04.2014 for A.Y 2010-11. 2. Both the appeals of the assessee for A.Y 2009-10 and 2010-11 involve a common issue relating to disallowance of interest made by the AO and confirmed by the ld CIT (A) to the extent it is allegedly attributable to the loans advanced by the assessee to the employee's welfare trust. 3. The assessee in the present case is a company which is engaged in the business of micro finance lending activities for providing financial services to the poor women in the rural areas of India. The returns of income for the years under consideration were filed by it on 26.09.2009 and 13.09.2010 declaring total income of Rs. 133.47 crores and Rs. ....
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....cumstances, of each case and cannot be assigned a limited meaning. It includes the sum of money expended, not only out of necessity and with a view of direct and immediate benefit to the trade, but also voluntarily and on the ground of business expediency. It also includes any act done by the assessee in order to facilitate the smooth running of business. The company respectfully places reliance on the decision of the Hon'ble Delhi High Court in the case of CIT v Dalmia Cement (Harat) Ltd (Supra) wherein it was held that: The term "commercial expediency" is not a term of art. It means everything that serves to promote commerce and includes every means suitable to that end. In applying the test of commercial expediency, for determi....
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.... .......... The company has advanced interest free loans to the Trust to provide appropriate remuneration to employees of the company and hence such loan is advanced for commercial and business purposes and no interest shall be disallowed due to the same". 4. The above explanation offered by the assessee was found to be not acceptable by the AO. According to him, the loan was extended by the assessee to employees welfare trust for the purpose of purchase of its shares and since the said purchase of shares was for the personal benefit of the employees, it was in no way connected to the business of the assessee company. Accordingly, relying on the decision of the Kerala High Court in the case of CIT vs. V. I. Baby & Co (2002) 254 ITR ....
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.... of business. It is the further contention of the assessee that no borrowed fund was utilized for advancing loan to the MD or the employee's welfare trust. From the assessment order or the order of the CIT (A), we do not find any clear cut finding whether the assessee has utilized borrowed funds for giving loan to the MD or employees welfare trust. In case of SSPDL Ltd. Vs. DCIT (24 ITR (Trib) 290 co-ordinate bench of this Tribunal held that unless interest payment is directly related to the diverted funds, it cannot be said that interest incurred by the assessee was for non business purpose. Since this fact has not been properly verified, we remit this issue to the file of the Assessing Officer who shall decide the same after a reasonable ....
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....both the years under consideration i.e. 2009-10 and 2010-11. 8. The ld DR, however, contended that this aspect of the matter requires verification as it is not clear that the same loan given by the assessee company to the employees welfare trust for A.Y 2008-09 is continued in both the years under consideration. Since the ld Counsel for the assessee also has no objection for getting this aspect verified from the AO, we restore this issue to the file of the AO for the limited purpose of verifying as to whether same loan given by the assessee company to its employees welfare trust is continued even during the year under consideration. If this factual position is found to be correct on such verification, the AO shall delete the disallowance....