2017 (5) TMI 638

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ax Act, 1961 (in short, "the Act") against the order dated 29.06.2016, Annexure A.III, passed by the Income Tax Appellate Tribunal, Amritsar Bench. Amritsar (in short, "the Tribunal") in ITA No. 196(Asr)/2015, for the assessment year 2010-11, claiming following substantial questions of law:-   "(i) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has erred in deleting the addition of Rs. 54,10,225/- on account of disallowance of interest expenditure, ignoring the specific finding of the CIT(A) that the assessee had not even attempted to show that the investments in sister concerns served any business purpose? (ii) Whether on the facts and in the circumstanc....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ess surplus funds, what was the need to take interest bearing loans. Thus, proportionate interest expenditure to the tune of Rs. 54,10,225/- was disallowed by the Assessing Officer and was added to the income of the assessee vide order dated 18.03.2013, Annexure A.I. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 27.02.2015, Annexure A.II, the CIT(A) confirmed the disallowance of interest expenditure made by the Assessing Officer. The CIT(A) observed that the assessee had not even attempted to show that the investments in sister concerns served any business purpose. The assessee claimed that the investments had been made from self owned funds and not from inter....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... was further recorded that in the assessment year 2012-13 also, the assessee had sufficient interest free funds to make investment in the group companies relying upon the decision of the Apex Court in Hero Cycle Private Limited Vs. Commissioner of Income Tax (Central) 63 Taxmann.com 308 and Commissioner of Income Tax-I, Ludhiana Vs. M/s Abhishek Industries Limited, Ludhiana, (2006) 286 ITR 1(P&H). The Tribunal allowed the appeals filed by the assessee. The relevant findings recorded by the Tribunal read thus:- "9. We have heard the rival parties and have gone the material placed on record. We find that for Assessment year 2010-11 the capital of the assessee company was Rs. 31,71,64,888/- which is apparent from the copy of balance sheet as ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Court in the case of Abhishek Industries and has further relied upon the decision of M/s Bright Enterprises Private Limited, decided by Amritsar Bench, we find that the decision of Bright Enterprises Private Limited has been overruled by Punjab and Haryana High Court. The findings of Hon'ble Punjab & Haryana High Court are reproduced below. "Held, allowing the appeal, that whether the amount was debited to the account of the sister concern in respect of the payment made or whether the amount was actually paid to the sister concern and used by it for the purpose of business, was immaterial. Either way the amount was used for the business of the sister concern. It was not even suggested that the advance was used by the sister concern for t....