TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 278
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....ts and circumstances of the case and in law, the Ld. CIT (A) has erred in understanding the facts & circumstances of the case and relied on non-applicable judicial precedents. 3. That on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in passing the order just based on surmises & conjectures and ignored the factual details submitted during assessment/appellate proceedings. 4. That on the facts and circumstances of the case and in law, the Ld.CIT (A) has erred in passing the order by raising doubt on "commercial expediency" of lender company and compliance/non -compliance of provisions under Companies Act 2013 by lender company. The Appellant craves leave to add, amend, alter, delete, rescind, forego or....
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....d assessed the income of Rs.30,24,410/- against the declared income of Rs.10,24,410/-. 5. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who after considering the submissions, sustained the addition and dismissed the appeal of the assessee. 6. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 7. Ld. Sr. DR appearing on behalf of the Revenue, supported the orders of the authorities below and submitted that the AO is clearly pointed out that the lendor company namely, M/s. Sumanglam Realtech Pvt.Ltd. was not having creditworthiness and the amount was deposited in the bank account of the lendor company one day before. Therefore, the assessee could not prove the creditworthiness....
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.... with the Director of the Company and in no way connected or having any nexus with the transactions / affairs of the company, for unlimited, period of time without collateral or without any interest. It is not acceptable that genuineness of the transaction is proved simply relying on the fact that the same is recorded in the Books of Account and the same has been made through banking channel. 6.6 As per submission of the appellant, it is noticed that attempt has been made to prove the creditworthiness of the company advancing loan relying on the fact that the company is having share capital of Rs. 22,80,000/-, reserve and surplus to the tune of Rs. 95,70,201/- and turnover of Rs. 20,15,39,652/-, which is suffice to lend an amount of Rs. ....
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....on the understanding that it shall be returned or an equivalent given, a sum of money lent on these conditions and usually with interest. However considering the fact on record, it is inferred that in the present case as per Resolution passed by the Board of Directors of the company, no time-frame has been defined / fixed for the appellant to repay the loan. Liberty has been granted to the appellant to repay the loan as and when the funds are available with him. Though Resolution has been passed by the company but there is no confirmation on the part of the appellant to repay the loan within any time frame. It is also worth mentioning that lending company has advanced interest free loan to the appellant whereas it has interest bearing liabi....
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.... of the Act. In Madhav Prasad's case (supra), the borrowed amount was donated to a college with a view to commemorate the memory of the assessee's deceased husband after whom the college was to be named. It was held by this Court that the interest on the borrowed fund in such a case could not be allowed, as it could not be said that it was for commercial expediency. Thus, the ratio of Madhav Prasad Jantia's case (supra) is that the borrowed fund advanced to a third party should be for commercial expediency if it is sought to be allowed under Section 36(1)(iii) of the Act. In the present case, neither the High Court nor the Tribunal nor other authorities have examined whether the amount advanced to the sister concern was by way o....
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....t view in our opinion was whether the amount advanced to the subsidiary or associated company or any other party was advanced as a measure of commercial expediency. We are of the opinion that the view taken by the Tribunal in Phaltan Sugar Works Ltd (supra) that the interest was advanced to the subsidiary company as a measure of commercial expediency is the correct view, and the view taken by the Bombay High Court which set aside the aforesaid decision is not correct. From the ratio of above judicial pronouncement, it is apparently clear that for making even an advance the principle of 'commercial expediency' is a must whereas in the present case the lending company has lent an amount equal to its total paid up capital without having any bu....