TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 754
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....of Income-tax (Appeals) 12, Mumbai (the learned CIT(A)) has erred in law and on facts in upholding, vide paragraph 8 at page 5 of her Order, the disallowance of Rs. 2,38,580/- incurred on interest on funds borrowed by it, which do not appear to have been deployed for the purposes of their business but utilised for interest free advances to your appellants group companies and subsidiaries. b. The Hon'ble CIT(A) has erred in law and on facts, vide paragraph 8 at page 5 of her Order, in stating that "......... The appellant has not made any new evidence to substantiate that the advances were given out of interest free fund and also not proved the commercial expediency before me. Hence, the appellant's submission, only on the ground of judicial reference, cannot be accepted without any explanation / evidence on the facts of the case. Accordingly, by being consistent with the decision in the applicant's own case earlier, by respectfully following predecessor CIT(A), this ground is dismissed. c. The Hon'ble Commissioner of Income-tax (Appeals) 12, Mumbai (the learned CIT(A)) has erred in law and on facts in not granting this ground when on the same footing she had g....
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....ring funds have been used for making interest free advances / investments with group companies. This is second round of litigation before the tribunal. In the first round , the tribunal set aside and restored the issues to the file of the AO for de-novo adjudication of the issues vide orders in ITA no. 5109/Mum/2013 dated 10.02.2014. The AO in second round of litigation vide assessment order dated 19.03.2015 passed u/s 143(3) r.w.s. 254 of the 1961 Act confirmed the said additions again , which were later confirmed by learned CIT(A) vide appellate orders dated 22-07-2016 in second round of litigation. Now being aggrieved by learned CIT(A) appellate orders dated 22-07-2016, the assessee has filed this appeal with the tribunal in second round of litigation. 4. The brief facts are that the assessee company is engaged in the business of manufacturing , trading and sale of water treatment plants, chemicals and related consumer products. 5. The assessee had advanced Rs. 79 lakh to its subsidiary company namely M/s Ion Exchange Enviro Farms Ltd as an interest free advance . There is no movement of funds during the year under consideration so far as interest-free advances of Rs. 79 lacs ....
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....007 which increased to Rs. 9.17 crores as at 31.03.2008. It was submitted that there is an increase in investments in subsidiary companies from Rs. 4.67 crores as at 31-03-2007 to Rs. 6.50 crores as at 31-03-2008 which was mainly due to removal of provisions for diminution in the value of investment which was earlier provided to the tune of Rs. 177.06 lakh in the financial year 2006-07 . Our attention was drawn to page no. 200/pb wherein Schedule no. 5 -Investments is placed . It was submitted that the assessee has given interest free advances to the tune of Rs. 79 lacs to its subsidiary company M/s Ion Exchange Enviro Farms Ltd due to commercial expediency which was given in earlier years and there was no advances made during the year. In any case , it was submitted that perusal of the audited Balance Sheet will reveal that the assessee's own capital inclusive of share capital and reserves were to the tune of Rs. 126.86 crores as at 31-03-2008 , which were more than the interest free advances to the tune of Rs. 79 lacs and investments made in subsidiary companies to the tune of Rs. 660.19 lacs and presumption will apply that assessee had invested its own funds towards these intere....
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....free funds as an advance/investment in its subsidiary companies. Perusal of the audited financial statements which is placed in paper book and facts emerging from records reveal that the assessee has neither advanced the said sum of money to the tune of Rs. 79 lacs to its subsidiary company during the year nor any major fresh investments in subsidiary companies were made during the year. The increased investment as is reflected in audited Balance Sheet in subsidiary companies as at 31-03-2008 vis-a-vis 31-03-2007 is mainly on account of write back of provisions to the tune of Rs. 177.06 lacs created in earlier years towards diminution in the value of investments. There is no specific finding of fact recorded by the authorities below that interest bearing funds were specifically raised and utilised towards granting interest free loans to subsidiary company or for making investments in subsidiary company for acquiring controlling interest. Perused of the audited Balance Sheet of the assessee company reveals that the owned funds consisting of share capital and reserve/surplus of the assessee company are to the tune of Rs. 126.86 crores as at 31-03-2008 which was Rs. 114.10 crores as a....