1993 (8) TMI 41

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....r advancing it to its subsidiary company was allowable under section 36(1)(iii) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that reimbursement of medical expenses were part of salary and not perquisites for the purpose of disallowance under section 40A(5) of the Income-tax Act, 1961 ?" At the instance of the assessee : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not allowing the assessee's claim for a sum of Rs. 29,83,126 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing the Income-tax Officer to treat the reimbursement of medical expenses as part ....

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....d between counsel that question No. 3 referred at the instance of the assessee is covered by the ratio of the judgment of this court in the case of CIT v. Shree Changdeo Sugar Mills Ltd. [1983] 143 ITR 469. Following the ratio of the said decision, we answer the said question in the negative and in favour of the Revenue. It is agreed between learned counsel that question No. 4 referred at the instance of the assessee is covered by the judgment of the Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961. Following the ratio of the said judgment, we answer the said question in the affirmative and in favour of the Revenue. Learned counsel on both sides concentrated on question No. 1 referred at ....

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.... by the abovereferred subsidiary company. It is not disputed that the subsidiary company is a separate legal entity and the business of the subsidiary company cannot be considered as the business of the assessee itself. Thus, the interest on money borrowed by the assessee for the purpose of business of the subsidiary company could not be deductible from the income of the assessee under section 36(1)(iii) of the Act. (b) Being aggrieved by the said order passed by the Income-tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner upheld the disallowance of the interest made by the Income-tax Officer concerning the amount of bank loans utilised by Messrs.....