TaxTMI 
TaxTMI 
2016 (8) TMI 1349
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....10,531/- which the Assessing Officer had made u/s 36(1)(iii) of the Act. 3. The brief facts of the case as noted in the assessment order are that assessee is a Prop. of M/s Modern Publishers which is a part of MBD group of Companies. The return was filed by the legal heir Smt. Satish Bala Malhotra (wife of the deceased) declaring income of Rs. 40,55,8,027/-. The case of the assessee was selected for scrutiny. During the assessment proceedings, the Assessing Officer observed that assessee had made investment of Rs. 72,28,15,197/- in various related concerns and assessee had not charged any interest on these investments. The Assessing Officer further observed that assessee had claimed bank interest amounting to 2,39,01,531/- as expenses in i....
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....pact of taking interest bearing loans and investing the same in fixed deposits was that assessee had earned more interest income than interest paid on interest bearing funds. The learned AR further submitted that the fact of investments in the form of fixed deposits being more than interest bearing funds establishes that assessee had made advances to sister concerns out of its own funds and form non interest bearing funds and therefore, the disallowance was jot justified. The learned AR in this respect invited our attention to (PB1to9) to highlight that assessee was having more non interest bearing funds than non interest bearing investments. It was further submitted that assessee was a majority shareholder in all the invest companies and t....
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....count 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, if for instance, as a result thereof 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.....
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....e to the tune of Rs. 84,82,25,180/- against which the assessee had invested as non interest bearing investments to the tune of Rs. 72,28,15,197/-. Therefore, non interest bearing funds are more than non interest bearing investments. Further we find that assessee has declared more interest income on fixed deposits than the interest paid by him on interest bearing funds. In view of the facts and circumstances, it cannot be said that assessee had deployed interest bearing funds into non interest bearing investments. 13. We further find that assessee is a sole proprietor of M/s Modern Publishers and is also a majority shareholders in the companies in which interest free investments has been made. Paper Book page 12 is the list of companies in ....