TaxTMI 
TaxTMI 
2009 (5) TMI 945
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....rted findings upholding the disallowance of interest expenditure of Rs. 10,24,59,637/- have been arrived at by ignoring the relevant materials and/or by taking into consideration irrelevant and/or extraneous materials and/or are otherwise arbitrary, unreasonable and perverse ? The facts of the case briefly are as follows ;- During the relevant previous year for the assessment year 1994-95 the appellant had borrowed funds on which it had paid interest. The deduction for such interest was allowed by the Assessing Officer (hereinafter referred to as AO) in the assessment made under Section 143(3) of the Income Tax Act, 1961 (the Act). Thereafter the Commissioner initiated proceedings under Section 263 of the Act on the ground that the AO had not investigated whether borrowed funds were given by way of interest free loans to the subsidiaries of the appellant. The initiation of the proceedings under Section 263 of the Act were challenged by the appellant by way of writ proceedings before this Hon'ble Court in which it was not successful. Thereafter by an order dated March 16, 1999 the Commissioner set aside the assessment made by the AO with a direction to frame it afresh. Agaisnt....
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....ence but the same were not at all considered by the Tribunal. The various facts as mentioned in Annexure B hereto as would appear from the Miscellaneous Application filed before the Tribunal, were urged before it and the various documents filed in the paper book were relied upon in support thereof at the time of the hearing. The Tribunal, however, failed to consider and/or deal with any of such facts and/or evidence and contentions of the Appellant. The facts stated in the said Miscellaneous Application were not controverted either by the department or the Tribunal which rejected the said Miscellaneous Application only on the ground that it would amount to a review of its order. The various facts and documents in support thereof and contentions raised which the Tribunal failed to consider and deal with are summarized herein below :- a) No part of the borrowed funds was utilized for any such interest free advances to the subsidiaries and others. b) The amounts were advanced in earlier years and in assessment proceedings of these years i.e. from assessment year 1991-92 onwards the issue was investigated, considered and no disallowance of any interest was made as it was fo....
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....d February 21, 1994 (150 of paper book) gave full details relating to the advance made by it to its three subsidiaries. The further documents which are annexed to the paper book, have also been placed before us by Mr. Bajoria. He pointed out that in the order of assessment (page 169 of paper book) the order of amalgamation was discussed by the assessing officer and it was recorded that income was being computed on the basis of details and documents and explanation submitted by the appellant. In the said order of assessment no disallowance was made on any interest borrowed funds with reference to the said outstanding against the said various concerns. The following facts were placed before us by Mr. Bajoria;- In the previous year relevant to the assessment year 1992-93, an advance of Rs. 37.56 crores was made by the appellant to its subsidiary Poly Investments Co. Ltd. In the course of the assessment proceedings the appellant duly pointed out that such advance was made from the sald procees of 62,60,000 equity shares held by it of RT Electronics Limited to Chohal Investments Lte. (pages 70 to 72 of PB). The details of the said amount would also appear from the statement of the....
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.... the said shares at page 123 of PB. The sale of the said shares was also reflected in the Balance Sheet of the appellant (Pages 124 to 125 of PB.) In the assessment for the assessment year 1994- 95 the transaction of sale of the said shares has been duly accepted by the AO. It would be seen that the amount advanced to Gupta & Syal Limited during the year was only Rs. 15,000/- and the rest was the opening balance. The amount advanced to Kishan Chand spinning Mills Limited during the year was about Rs. 85,981/- on the various days and the rest Rs. 25.62 lakhs was the opening balance of the earlier years. From the accounts of Kedarnath Kishan Chand Finance & Investments Limited it would be seen that no advance was made during the year and the entire amount related to the earlier year's balance. In the case of Poly Investments Limited it would be seen that the total advance to the said subsidiary during the year was reduced. The opening balance of the advance to the said firm was Rs. 43.54 crores whereas the closing balance was Rs. 33.85 crores only. The statement of accounts of the appellant with the said companies for the year ended March 31, 1994, relevant for the assessment y....