2016 (6) TMI 521

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....this common order for the sake of convenience. 2. The common grievance in both these appeals relate to the disallowance of deduction for interest paid by the assessee on its borrowing from HDFC Bank. 3. In this case, the return of income for A.Y. 2002-03 was filed on 02.12.2003; the return was selected for scrutiny assessment. During the course of the scrutiny assessment proceedings, the A.O found that the assessee has claimed interest expenses of Rs. 7,17,59,981/- being paid to HDFC Ltd. On further probe, the A.O found that the assessee has received a loan of Rs. 46 crores from HDFC Ltd., out of which Rs. 21 crores which were received on 21.06.2001 was paid to Arvind Mills Ltd. Similarly, Rs. 10 crores received on 07.09.2001 was again pa....

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....man power and experience so as to develop and make this project successful. Copy of MOU entered between two parties were supplied to the A.O. It was stated that Rs. 15 crores advanced by the assessee is in line with the MOU signed between assessee and M/s. SSKI. It was once again claimed that the advances were given during the course of the business only and there is a direct nexus between the advance of money and the business of the assessee. 9. The reply of the assessee was considered but was not found acceptable to the A.O. Thereafter, the A.O simply incorporated the findings from the original assessment order, and once again, the interest expense of Rs. 77,35,960/- in A.Y. 2002-03 & Rs. 1,16,40,385/- in A.Y. 2003-04 were disallowed. Th....

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....y stating that the assessee has successfully established the nexus and, therefore, the claim of interest expenses should be allowed. 12. Supporting the findings of the revenue authorities, the ld. D.R. vehemently stated that the assessee has not discharged the onus cast upon it by the directions of the Tribunal in the first round of litigation. Therefore, there is no error/infirmity in the findings of the First Appellate Authority. 13. We have given a thoughtful consideration to the findings of the authorities below. We have also carefully perused the directions of the Tribunal given in the first round of litigation. There is no dispute in so far as the finding of the Tribunal is concerned. All that is to be considered is whether the asse....

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....d Company can pursue the other objects at par with main objects of the company. 18. As mentioned above, the objects in the Memorandum of Association are clearly in favour of the impugned transaction and establish a direct nexus between the business of the assessee and the advancing of money. Our view is also fortified with the financials of the assessee in as much as in the Balance Sheet under the Head "Stockin- trade" there is a balance of Rs. 880,083,323/- which includes building of Rs. 838,915,200/-. These figures are exhibited at pages 6 and 10 of the paper book, being Balance Sheet and its schedules for the year ending 31.03.2002. These factual datas clearly show that assessee is very much in business in the real estate and showing th....