TaxTMI 
TaxTMI 
2019 (2) TMI 271
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "1. On the facts and circumstances of the case & in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,32,00,000/- made by the AO by way of disallowance on a/c of interest free ICD advance by the assessee company) solely relying on the submission of the assessee company that interest on such ICD was duly charged and offered to tax in the subsequent year 2011- 12, without verifying the facts in this regard which were contrary to the submission made by the assessee company before the CIT(A). 2. On the facts and circumstances of the case & in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 1,32,00,000/- made by the AO by way of disallowance on a/c of interest free ICD advanced by the assessee compan....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is not tenable on facts and in law. 7. That the grounds of appeal are without prejudice to each other." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : assessee is into the business of oil & gas exploration and production. Assessing Officer noticed that the assessee has lent unsecured interest free loans to the tune of Rs. 11,00,00,000/- to M/s. Jubilant Oil & Gas Pvt. Ltd.. Declining the contentions raised by the assessee, AO made disallowance of Rs. 1,32,00,000/- @ 12% on the ground that the said funds were interest bearing in nature. AO also noticed that the assessee has paid upfront fees of Rs. 2,09,02,500/- to the Central Bank of India for disbursement of a term loan of Rs. 200 crore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....system of accounting, the ld. CIT (A) erred in deleting the additions and relied upon the order passed by the AO. GROUNDS NO.1 & 2 7. Undisputedly, the assessee company has advanced unsecured interest free loans of Rs. 11,00,00,000/- to M/s. Jubilant Oil & Gas Pvt. Limited (JOGPL), its group company. It was the case of the assessee before ld. CIT (A)/AO that in AY 2009-10, Intercorporate Deposit (ICD) of Rs. 11,00,00,000/- was advanced to JOGPL by virtue of the loan agreement dated 01.04.2008 on the terms that no interest was payable and as such, no interest income was offered to tax in the return of income. It was further the case of the assessee that ICD advance by the assessee company was out of own funds as the same was advanced m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nly once during the tenure of the term loan. It is the case of the assessee that such expenses on account of upfront charges are allowable u/s 36(1)(iii) of the Act read with section 2(28)(a) of the Act It is also not in dispute that interest paid on the monies borrowed for purpose of business is allowable deduction u/s 36(1)(iii) of the Act. 10. When we examine provisions contained u/s 36(1)(iii) in the light of the definition of "interest" in section 2(28)(a) of the Act, it certainly includes any service fee or other charges in respect of money borrowed or debt incurred. Even otherwise, when AO has allowed the interest on the loan in question as Revenue expenditure then how the "upfront fee" which also form the part of the interest can....