TaxTMI 
TaxTMI 
2019 (5) TMI 348
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....cumstances of the case the Tribunal is right in deleting the addition made under Sec. 40A (9) towards payments made to Employees' Welfare Trust holding that Section 40A (9) is not applicable in the case and is not the deletion of the addition against law and the finding of inapplicability of sec. 40A (9) unsustainable and wrong in law 2. Whether, on the facts and in the circumstances of the case and section 43A of the I.T.Act takes care of fluctuations in foreign exchange rate only on payment the ITAT is right in law in deleting the disallowance of depreciation on enhanced cost of equipments and is not the deletion based on notional increase/decrease, against law and the intention of the legislature? 3. (a) Whether, on the facts and in the circumstances of the case, the ITAT is right in law in deleting the disallowance of Rs. 24,30,000/- towards interest free advance to a subsidiary company (a different entity for income tax) unlike in the case of the Supreme court decision in 220 ITR 185 (relied on by the ITAT in this case) where the assessee was the same having different businesses? 4. Whether, on the facts and in the circumstances of the case and the interest free a....
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....ssessee's case) pertaining to the assessment year 1993-94. In the said case, the Assessing Officer had disallowed the depreciation, holding that the increase in liability was artificial and did not represent any actual payment during the year, by virtue of which it would not come within the purview of Section 43A. However, the Commissioner of Income Tax (Appeals) took a stand in favour of the assessee and held that the instance would clearly fall within the ambit of Section 43A and in turn, directed the Assessing Officer to grant the relief, which was sought to be challenged by the Revenue before the Tribunal. It was brought to the notice of this Court that the issue was squarely covered in favour of the assessee, by virtue of the rulings rendered by the Supreme court in Commissioner of Income Tax, Delhi vs. Woodward Governor India P.Ltd [312 ITR 254 (SC) and Oil and Natural Gas Corporation Ltd, Dehradun, through Managing Director vs. Commissioner of Income Tax, Dehradun.[322 ITR 180 (SC)]. In the light of the dictum laid down by the Apex Court, we held that the challenge raised by the Revenue was devoid of any merit and no substantial question of law was involved. The said fin....
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.... businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. We wish to make it clear that it is not our opinion that in every case interest on borrowed loan has to be allowed if the assessee advances it to a sister concern. It all depends on the facts and circumstances of the respective case. For instance, if the directors of the sister concern utilize the amount advanced to it by the assessee for their personal benefit, obviously it cannot be said that such money was advanced as a measure of commercial expediency. However, money can be said to be advanced to a sister concern for commercial expediency in many other circumstances (which need not be enumerated here). However, where it is obvious that a holding company has a deep interest in its subsidiary, and hence if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purpos....
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....he ld. Counsel for the assessee would submit that the business interest has to be decided by the assessee. The Department cannot sit in the armchair of the assessee to decide that the same is for the purpose of the assessee's business and out of the business expediency, this was necessitated by the assessee company to advance interest free loans. Otherwise, the loans would get sunk. This is a prudent decision of the businessman and the services of M/s.GPEL is more required for the business of M/s.Apolo Tyres Ltd., the assessee company. Hence, this is for the purpose of business. This notional interest cannot be disallowed. To that proposition, the ld. Counsel for the assessee relied on the decision of the Hon'ble Supreme Court in the case of S.A.Builders 288 ITR 1 (SC). On the other hand, the learned Departmental Representative relied on the orders of the authorities below as well as the decision of the Jurisdictional High Court in the case of V.I. Baby & Company, 254 ITR (Ker). 32. We have heard the rival submissions and perused the material available on record including the precedents. The assessee is having maximum funds. The Department has disallowed interest on inte....