TaxTMI 
TaxTMI 
2016 (10) TMI 1258
X X X X Extracts X X X X
X X X X Extracts X X X X
....r law Ld. CIT(A) erred in deleting the addition amounting Rs. 11463036/- u/s 36(i) (iii). 2. That on the facts and in the circumstances of the case and as per law Ld. CIT(A) erred in deleting the addition of interest paid by the assessee on borrowed fund utilized for investment in subsidiary company. 3. That on the facts and in the circumstances of the case and as per law Ld. CIT(A) erred to delete the factual finding made by the AO on the basis of available records. 3. The assessee is a company and engaged in the business of manufacturing, trading and sel ling of printing inks, industrial adhesive and other allied products and filed its return of income declaring total income of Rs. 19,26,75,196/- on 29.09.2008. Under scrutiny, noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment / expenditure for the purpose of the company and the assessee was not left with own sources to invest in the said subsidiary company. The AO held that the assessee uti l ized its own funds which resulted in earning of exempted income. In absence of specific calculation with reference to said investments, the AO opined that amount of Rs. 10,75,33,170/- has not been used for the purpose of business and average interest thereon was disallowed. Amount of loan as on 31.03.2007 Rs. 79,26,58,9671- Amount of loan as on 31.03.2008 Rs. 38,78,81,383/- Average of loan Rs. 59,02,70,175/- Amount debited into P & L account Rs. 6,28,93,526/- Average rate of interest 10.66% Amount of interest @ 10.66% on Rs. 10,75,33,170/- Rs. 1,14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ary, DIC Coatings Limited which was made in the year 1997. Till 31.12.1997 the appellant was carrying on business of can coatings through its coatings division having manufacturing facilities at Bangalore. In terms of the order passed by the Calcutta High Court u/s 391 to 394 of the Companies Act, 1956 approving a scheme of arrangement; coating business on a going concern basis with all its assets and liabilities was transferred on slump sale basis to appellant's wholly owned subsidiary viz. DIC Coatings Limited (then known as Coates Coatings I. Ltd.) effective from 1.1.1998. As per the terms approved by the High Court the consideration for sale of coating business was entirely satisfied by the transferee by issuing its equity shares. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ta High Court whereby the coating business was transferred on slump sale basis to the subsidiary which in consideration allotted shares to the assessee. Since the assessee had established that the source of acquisition of shares of the wholly owned subsidiary was sale of coating business and not interest bearing funds, the CIT(Appeals) held that the interest paid on borrowings could not be disallowed and accordingly deleted the addition of Rs. 21,19, 144/-. It is material to mention that the Department has not preferred an appeal against the order of the CIT(Appeals) for AY 2005-06 before the Hon'ble ITAT, Kolkata. However in the various grounds taken in the appeal the Department has not objected to the CIT(Appeals)'s order delet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....findings of the AO, i am inclined to agree with the contention of the A/R the factual matrix involved in the appellate order passed by my predecessor in appellant's own case for AY 2005-06 is pari materia to the facts involved in the relevant year under consideration, in the impugned order the Assessing Officer has categorically observed that the appellant has only single investment in its wholly owned subsidiary DIC Coating lndio Limited which was acquired in 1997. He has also noted the fact that the shares of the subsidiary were acquired pursuant to sale of coating business to the latter in terms of a Scheme of arrangement approved by Calcutta High Court. Hence, undisputedly no fresh investments were made in the year under considerati....