2017 (8) TMI 185

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....r the assessment year 2012-13 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. 3,71,68,025/- made by the Assessing Officer, 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 circumstances of the case, the Hon'ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has erred in deleting the addition of Rs. 3,71,68,025/- made by the Assessing Officer, on account of....

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....f M/s MBD Printographics Private Limited, the Assessing Officer noticed that share capital of the said company had already been fully subscribed and there was no reason to accept the funds from the assessee as 'Share Application Money'. It was concluded that the investment was colorable transaction of loan/advance without any interest to its sister concern in the shape of 'Share Application Money'. Similar was the position with other investments. The assessee had claimed expenditure on account of Bank interest. Since the assessee had not been able to prove with evidence that interest bearing funds were used exclusively for business purposes, the expenditure of Rs. 3,71,68,025/- of bank interest on CC limit, was disallowed and added to the i....

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....by the appellantrevenue. 3. We have heard learned counsel for the appellant-revenue. 4. A perusal of the order passed by the Tribunal shows that relying upon the judgment of this Court in Bright Enterprises Private Limited Vs. Commissioner of Income Tax (2016) 381 ITR 107, it was recorded that commercial expediency in advancing loans does not arise only on account of there being transactions directly between the holding company and the subsidiary company or between the group companies inter se. The two companies may even be in a different line of business. It would make no difference. It would still be commercially expedient for one group company to advance amounts to another group company. In the present case, the impugned advance had be....

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....eof the former benefits. In the present case, as we have already demonstrated, there would be a direct benefit on account of the advance made by the appellant to its sister company if the same improves the financial health of the sister company and makes it a viable enterprise. We hasten to add that it is not necessary that the advance results in a positive tangible benefit. So long, as the amount is advanced with that view in mind or with any other commercially expedient view in mind that is sufficient." 7. Further, the judgment in the case of 'Abhishek Industries' (supra) relied upon by both the Authorities below has also been overruled by the Hon'ble Supreme Court in the case of 'Hero Cycles Vs. CIT', 379 ITR 347 (SC) (copy placed at ....