TaxTMI 
TaxTMI 
2015 (7) TMI 397
X X X X Extracts X X X X
X X X X Extracts X X X X
....(A) erred in law and on facts in deleting the disallowance of Rs. 40,26,706/- in the Assessment Year 2001-02 and Rs. 33,65,950/- in the Assessment Year 2002- 03, made by the Assessing Officer on account of disallowance of interest. It was further submitted that since the facts & circumstances of cases in both the assessment years are identical except for the amounts and the assessment year, they have common submissions to make and therefore, both the appeals can be decided together. We, therefore, proceed to dispose of both the appeals by way of a consolidated order for the sake of convenience and proceed with the facts for the Assessment Year 2001-02. 3. The brief facts of the case, as culled out from the records for the Assessment Year 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orking capital loans on which the assessee was incurring liability to pay interest. He also noted that the assessee had accumulated losses of Rs. 42,25,11,404/- and was incurring losses even prior to Assessment Year 2001-02. He was, therefore, of the view that there was no commercial expediency or justification to advance interest free loans and advances and according to him, the assessee had failed the tests enumerated by Hon'ble Apex Court in the case of S.A. Builder Ltd. (supra) and accordingly held that no deduction was allowable to the assessee. He, thus, disallowed the claim of interest and assessed the total loss at Rs. 72,47,965/-. 5. Aggrieved by the aforesaid order of the Assessing Officer, the assessee carried the matter bef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was directed by the Hon'ble Supreme Court that if the amount advanced to sister concern is out of commercial expediency and there was a nexus between the expenditure and purpose of the business, the disallowance cannot be made, it was further observed by the Hon'ble Court that the revenue cannot justifiably claim to put itself in the arm-chair of businessman or in the position of the Board of Directors and assume the role to decide how much is the reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize its profit. In the case of the appellant, the appellant is a loss making company and had approached BIFR for declaring it as a sick company. The company had no liquid funds f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A), while granting relief to the assessee, has noted that the assessee has given interest free advances to those parties with whom the assessee was having regular business transactions and some of them were suppliers of raw-material and packing material and the advance was made for purchase of material. He also noticed that most of the advances were given in earlier years and there were few transactions done during the year under consideration. The ld. CIT(A) has further given a finding that the assessee had no liquid funds for its day to day business transactions and did not make any borrowing during the year nor any new advances were granted by the assessee and the advances, which were granted in earlier years, were in connection with the....