2016 (5) TMI 478

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....ntial question of law, which arises for our consideration in this appeal, is as follows:- "Whether the Income Tax Appellate Tribunal as also the Commissioner of Income Tax (Appeals) had not erred in law and / or on facts in deleting the disallowance on discount and interest on borrowing through commercial papers and Non-Convertible Debentures (NCDs) amounting to Rs. 10,79,75,982/-?" 3. The Assessing Officer, by virtue of the assessment order dated 29.12.2010, disallowed expenditure to the tune of Rs. 10,79,75,982/- on the ground that the expenditure was not for business purposes. The said figure of Rs. 10,79,75,982/- had two components. The first component was the discount on commercial paper amounting to Rs. 8,45,75,982/-. The ....

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....reed to sell the entire shareholding of 34.33% in both the companies for a total sale consideration of Rs. 16 crores being the fair market price of the shares. After this, the Amar Ujala group was to have complete control of the companies and Shri Ajay Aggarwal and others connected with him would not have any relationship with the said companies in any manner after receiving the full and final consideration. According to the Assessing Officer, the shares of Shri Ajay Aggarwal and others were bought by the respondent/assessee and the transaction was purely one of acquisition of shares and had no bearing on the business being carried out ordinarily by the respondent/assessee. The Assessing Officer also observed that during the year in questio....

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....ations Limited. In the preceding year, consequent upon the order passed by the Company Law Board on 07.08.2006, the respondent/assessee bought the shares held by Shri Ajay Aggarwal and others in A & M Publications Limited. Similarly, A & M Publications Limited had bought the shares of the respondent/assessee held by Shri Ajay Aggarwal and others. The Commissioner of Income Tax (Appeals), however, observed that after the acquisition of these shares, A & M Publications Limited merged with and into the respondent/assessee resulting in the cancellation of the shareholding held by each of the companies, which meant that the shares held by Shri Ajay Aggarwal and others also got cancelled. It was observed that as on 01.04.2007 post-merger, the ent....

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.... shareholding of both these companies got cancelled also resulting in the cancellation of the shares held by Shri Ajay Aggarwal and others. 7. The Tribunal further observed that after the merger, the entire funds of the company of the respondent/assessee were deployed for the purpose of its business. It was noted that the respondent/assessee, as per the balance-sheet drawn on 31.03.2008, owned funds of Rs. 51.26 crores and had secured loans of Rs. 165.63 crores as against fixed assets of Rs. 171.64 crores and current assets of Rs. 118 crores. It was observed that the funds had been deployed in these assets and this fact remained undisputed. Thus, the Tribunal arrived at a finding of fact that the entire borrowed funds, during the year, s....