TaxTMI 
TaxTMI 
2015 (6) TMI 797
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....assessment years 2007-08 and 2009-10 respectively against orders passed under section 143(3) of the Act. 2. All the three appeals relating to the same assessee on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The Revenue, in ITA No. 7758/Mum/2010 & ITA No. 1364/Mum/ 2011, has raised the following grounds of appeal: - "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 18,50,000/- being interest disallowed u/s. 36(1)(iii) of the I.T. Act, 1961, overlooking the failure of the assessee to substantiate that the amounts borrowed were for the purpose of the assessee's business. 2. On the facts and in ....
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....elating to interest free loans & advances and investment made for non business purposes should not be disallowed under section 36(1)(iii) of the Act. In reply assessee stated that the said investment was made in 100% subsidiary company by way of share capital of Rs. 1 lakh and share application money of Rs. 109 lakhs and advance of Rs. 75 lakhs. The said investment was claimed to have been made out of Capital & Reserves and surplus of the company and it was claimed that no disallowance under section 36(1)(iii) of the Act was warranted. The AO noted that the share capital of assessee was Rs. 20 lakhs, which was with the company for the past several years and the same had already been utilised in application of funds in the earlier years. The....
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....d investment was made in tax free funds, though with the subsidiary, in the absence of any trade between the two and in the absence of any commercial expediency, there was no merit in the plea of the assessee. 8. On the other hand, the learned counsel for the assessee pointed out that the total Capital & Reserve and surplus of the assessee as on the close of the year was Rs. 3 crores and even the bank loan had reduced to Rs. 57 lakhs. The first plea of the learned counsel for the assessee was that the said investment with the subsidiary was made out of its own Capital & Reserves and surplus. Another plea raised by the learned counsel was that the investment was made by the assessee with its own subsidiary, who was in the same line of busin....
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....made disallowance under section 36(1)(iii) of the Act. The CIT(A) noted that both the assessee and its subsidiary were in the business of manufacturing of mining tools. The advance made by the assessee was utilised for the business of the subsidiary company, hence, in turn, relying upon the ratio laid down by the Hon'ble Supreme Court in the case of S.A. Builders Ltd. (supra) it was held that the said advance was because of commercial expediency and hence no part of interest was disallowable under section 36(1)(iii) of the Act. The addition made by the AO was Rs. 2,21,731/- and because the small tax effect no appeal was filed before the Revenue against the said order. 10. In the instant year, assessee had further advanced Rs. 75 lakhs ....
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....nder mentioned grounds have been raised: - "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of interest expenditure of Rs. 13,90,000/-, on the ground that for A.Y. 2005-06, 2006-07 and 2007-08, the department has accepted the CIT(A)'s decision. The disallowance made by the Assessing Officer as interest expenses was on account of interest free advances, which were not used for the purpose of assessee's business. Further, the CIT(A)'s order for A.Y. 2005-06 was not challenged due to low tax effect and appeals on the same issue have been preferred against CIT(A)'s order for A.Y. 2006-07 & 2007-08. 2. Whether on the facts and in the circumstances of the....
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....ommon Directors. As per the AO it was evident that similar nature of services were rendered by the Directors in both the companies. The only difference between the companies was that assessee company was 36 years old whereas the subsidiary was only 5 years old and in view thereof AO allowed only a remuneration of Rs. 3,50,000/- and the balance remuneration of Rs. 22,80,000/- was disallowed. 15. The CIT(A), on consideration of the facts, observed as under: - "5.3 I have carefully considered the facts of the case, the submissions of the appellant the assessment order and the order of CIT(A) for A.Y. 2008-09. The A.O. has disallowed the remuneration on the ground that much less remuneration was paid in the case of sister concern. Although, t....