2018 (10) TMI 440

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....ates to the Assessment year 1999-2000 and arises from the order of the Income Tax Appellate Tribunal ['Tribunal'] dated 18th August, 2017. 2. This is second round of litigation. By the order dated 24th November, 2010 passed by the Delhi High Court in ITA No. 1248/2007 the issue of disallowance of Rs. 1,50,04,133/- under Section 36(1)(iii) of the Act was remitted to the file of the Assessing Officer in light of the judgment of the Supreme Court in S.A. Builders LTD versus Commissioner of Income Tax, (2007) 1 SCC 781. 3. The Assessment Order on remand observes that the respondentassessee had been asked to adduce material to prove that the interest free advances to sister concerns were out of its own funds and not out of borrowed....

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.... expression "for purposes of business or profession" occurring in Section 36(1)(iii) of the Act is wider in scope than the expression "for the purpose of earning income, profits or gains". Accordingly, expenditure voluntarily incurred on the test of commercial expediency is to be allowed as a deduction. It is immaterial if a third party also benefits by the said expenditure. The expression "commercial expediency" is again of wide import and includes such expenditure incurred for the purpose of business. Therefore, once it is established that there was a nexus between expenditure and purpose of business, which need not be the business of the assessee, deduction under Section 36(1)(iii) of the Act must be allowed. Revenue cannot assume the ro....

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....schedule of secured loans and unsecured loans in the balance sheet as on 31st March, 1998. The loans taken by the respondent-assessee were for specific purposes and were duly represented by the value of stock. He observed that the respondent-assessee during the period relating to the Assessment Year had sales of Rs. 37.16 crores, paid up share capital of Rs. 8.20 crores and reserves of Rs. 1.23 crores. He concluded that the respondent-assessee had furnished ample evidence to show that sufficient funds were available to give interest free loans. Accordingly, addition of Rs. 1,50,04,133/- was directed to be deleted. The aforesaid factual reasoning negates and nullifies the factual reasoning given by the Assessing Officer. 7. Agreeing with the....