TaxTMI 
TaxTMI 
2021 (7) TMI 917
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....s decision in deleting the addition of Rs. 70,93,991/- on account of finance charges/interest on borrowed funds relying upon the fresh evidence produced before the CIT(A) and ITAT, without affording an opportunity to the Assessing Officer to examine the same though, the assessee had not been able to prove, with evidence, at the time of the assessment proceeding that the borrowed funds were wholly and exclusively used for business purpose and not diverted to give interest free advances to sister concerns? B. Whether the Hon'ble ITAT was right in not appreciating that the addition of Rs. 15,37,40,627/- made on account of interest free loans advanced by the assessee to its subsidiaries, amounts to transfer of income without transferring ....
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....plain why interest income should not be taxed in the hands of the assessee given the provisions of sections 60 and 61 of the Income Tax Act, 1961 (I.T. Act). The detailed explanation furnished by the assessee was not accepted by the assessing officer, who, by his order dated 28.11.2013, ordered the addition of an amount of Rs. 15,37,40,627/- to the total income of the assessee under the head "Income from other sources". 6. The assessee appealed and the Commissioner of Income Tax (Appeals) and by his order dated 28.11.2014, accepted the case of the assessee and ordered the deletion of the amount of Rs. 15,37,40,627/-. 7. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT) and the ITAT, by order dated 27.07.2015 dismissed ....
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....ssessee as deductions. He submits that the material on record points out to the reserve of Rs. 1,000 crores, held by the assessee as well as the fact that the subsidiaries have not earned any interest as such from the interest-free loan advanced by the assessee. He relied on several decisions, including the decision in CIT-7 vs. Reliance Communications Infrastructure Limited (2012) 21 Taxmann 118 (Bom), to submit that this appeal may be dismissed. 10. Mr. Nanivadekar also relied on The Principal Commissioner of Income Tax vs. Sesa Resources Ltd. (Earlier known as VS Dempo & Co Pvt Ltd) Tax Appeal No.57 of 2016, decided on 16.08.2017, in which, the Division Bench of this Court, has rejected the Revenue's contention that even notional in....
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....inding that the assessee had reserves of over Rs. 1,000 crores. Based on all these findings of fact, the CIT (Appeals) has concluded that the loans were advanced for commercial expediency. 13. The ITAT, upon considering the contentions of the Revenue has affirmed the findings of fact recorded by the CIT (Appeals). Thus, in this case, there are concurrent findings of fact that are themselves based on the material on record. Therefore, even if we proceed on the basis that the commercial expediency test is indeed required to be applied to the case at hand, such test stands fulfilled based on the concurrent findings of fact recorded by the two authorities. 14. The ITAT has also relied on the decision of the Gauhati High Court in Highways Cons....
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....the view that it is not in every case that interest on a 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 the money so advanced is a measure of commercial expediency. However, money can be said to have been advanced to a sister concern for commercial expediency in many other circumstances. Where a holding company, has a deep interest in its subsidiary, and the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purpose,....