TaxTMI 
TaxTMI 
2021 (10) TMI 961
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.... the case. 2. Whether on the facts and in the circumstances of the case, the CIT(A) was justified in law in following the decision of the jurisdictional High Court in the case of CIT & Anr. v. M/s. Microlabs Ltd. ( 383 ITR 490 ), without looking into the commercial/business expediency of the transaction between the assessee and its subsidiary company. 3. Whether on the facts and in the circumstances of the case, the CIT(A) was justified in law in not relying on the decision of the jurisdictional High Court in the case of Embassy Development Corporation v. ACIT, wherein similar facts are involved. 4. Whether in the facts and circumstances of the case, the CIT(A) was justified in allowing the depreciation of the Hom....
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....".....the assessee company has diverted a total amount of Rs. 9,72,38,877/- towards its sister concern without charging any interest. The interest disallowable is worked out at the rate of 14.5% on this amount of Rs. 9,72,38,877/-. Considering the above at the rate of 14.5% interest, the interest disallowable is worked out at Rs. 1,40,99,637/-. Hence the amount of Rs. 1,40,99,637/- is being disallowed as interest." 4.1. Aggrieved, the assessee preferred an appeal to the first appellate authority. The CIT(A) deleted the addition of Rs. 1,40,99,637. The reasoning of the CIT(A) to grant relief to the assessee are as follows:- "(i) The balance outstanding in the name of M/s. Tally India (P) Ltd. relates to entries made consequent to....
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....ion v. ACIT reported in 62 Taxmann.com 234 (Kar.) is distinguishable on facts. It was submitted in the said case that the assessee, a builder, had advanced certain borrowed funds to the sister-concern for acquiring a land and putting up a project, which was developed by the sister-concern. Therefore, in the facts of those case it was held by the Hon'ble Court that there was no benefit to the assessee for diverting borrowed funds to the sister-concern without charging interest. It was submitted by the learned AR that on the facts of the instant case, the judgment of the Hon'ble jurisdictional High Court in the case of CIT & Anr. v. Microlabs Ltd. (supra) is squarely applicable. 4.4. We have heard rival submissions and perused the ....
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....ment of the Hon'ble jurisdictional High Court relied on by the Revenue is distinguishable on facts. In the case of Embassy Development Corporation v. ACIT (supra), the assessee advanced borrowed funds to the sister-concern. The diverted funds was utilized by sister-concern for purchase and development of a property. In this context, the Hon'ble High Court held that funds have been diverted to sister-concern not out of business necessities of the assessee. In the instant case, it is clear that the assessee is having sufficient interest fund for diversion to sister-concern. Therefore, the judgment of the Hon'ble Karnataka High Court in the case of CIT & Anr. v. M/s. Microlabs Ltd. (supra), has application to the facts of the insta....
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....d before the first appellate authority that the Assessing Officer has disallowed depreciation of Rs. 30,28,504 as against depreciation claim made by the assessee of Rs. 15,14,252 (50% depreciation claimed by the assessee, since home-theater was purchased after 01.09.2013). Therefore, it was submitted that there is excess disallowance. It was further submitted on merits the home-theatre is for the business purpose only and the original invoices were destroyed in fire and the same could not be produced. The CIT(A) allowed the plea of the assessee and deleted the addition. The relevant finding of the CIT(A) reads as follow:- "5.4.4 I find force in the argument of the A/R and also the submissions made. The Assessing Officer has wrongly....