AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 303
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.... Act, 1961 [hereinafter referred to as 'The Act' for short]. 3. Briefly stated, the facts of the case are that assessee company is engaged in the business of production, generation, storage, transmission, distribution and supply of electricity and power and energy. The assessee company is a wholly owned subsidiary of ACB (INDIA) Limited and it is a flagship company of Aryan Group. The assessee company was incorporated on 20.07.2010 with main object, inter alia, to carry on the business of production, generation, storage, transmission distribution, supply of electricity, to promote, own, acquire, erect, construct, establish, operate, maintain, take over power companies and to hold shares in power companies. 4. On scrutinising the r....
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....mpany has the largest coal beneficiation plant in India in Dipka (Chhattisgarh), with a designed capacity of 12.00 million tons per annum. ACB (India) Power Ltd (referred as ACBIPL herein after)was formed foi better management prospective of power plants. The management of ACB ha decided to segregate the reject based power plants and raw coal based power plant and in July' 2010 the company formed its new subsidiary ACBIPL. All coal bas< power plants are managed through ACBIPL and all rejects based thermal are managed by ACBIL. The memorandum of ACBIPL reads as under: 1. To carry on the business of production, generation, storage, transmission distribution and supply of electricity (bulk and retail), power and ei 2. To promote, o....
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....nclosed evidencing their nature of business, wherein the Assessee Company has in previous years and current year. The subsidiaries and groupcompanies have entered into MOU Implementation agreements with the Govt Authorities. Long Term Open Access has been granted to the subsidiaries and group companies and Bulk Power Transmission Agreements, have been entered into by the Assessee Company. It is one of the objective of the Assessee Company, to promote, own erect, construct, establish, operate, maintain, takeover power companies, ho in power companies or turnover, acquire, operate, maintain,manage companies engaged in power plants. Even the amountinvested by the share capital infusion during the year under assessment. The Interest paid is....
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....le as a business expenditure, if it was incurred on grounds of commercial expediency. It has been repeatedly held by this Court that the expression "for the purpose of business" is wider in scope than the expression "for the purpose of earning profits" vide CIT v. Malayalam Plantations Ltd, [1964] 53 ITR 140, CIT v. Birla Cotton Spg. AWvg. Mills Ltd. [1971] 82 ITR 166 etc. It is important to mention that even the investments made in share capital of the subsidiary companies by the assessee could not be called the investments for non-business purpose because in the memorandum and the articles of the company, one of the objects the assessee-company mentioned is "investments in shares of other companies by the assessee" We rely on the Ho....
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....t has been incurred to peruse the objectives as laid down by the MOA and AOA and Investments in subsidiaries and group companies, is a business activity for the Assessee Company. " 8. After considering the aforesaid reply of the assessee, the Assessing Officer observed that the borrowings of the assessee also has been invested in share capital of subsidiary companies and even the funds raised during the year under consideration have been invested in subsidiary shares of group companies and also repaying the loans. The Assessing Officer was of the firm belief that borrowed funds have been utilised for non business purposes and, therefore, the claim of interest u/s 36(1)(iii) of the Act is not justified. The Assessing Officer was of the opin....
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....urt has held as under: Where it is obvious that the holding company has deep interest in is subsidiary and hence if the holding company advances borrowed money to a subsidiary and the same is used for some business purpose of the assessee would, in our opinion, ordinarily be entitled to deduction on interest of its borrowed loans." 15. The facts of the case in hand are on stronger footing in as much as in the case in hand, the appellant did not advance any loan to its subsidiaries but has invested in the shares of subsidiary companies. As mentioned elsewhere, subsidiary companies of the appellant are engaged in the same business as that of the assessee which is also evident from the main object clause in the Memorandum of Association. 1....