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2023 (2) TMI 860
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....y the appeal filed by the assessee against the order u/s 143(3) passed by Additional CIT, Special Range 05, New Delhi (hereinafter referred to as the "Ld. Act") dated 9.12.2016 was dismissed and the order of Ld. AO was upheld. 2. The brief facts are assessee had filed return of income of Rs. 35,93,33,030/-. The assessee company is a General sales Agent of various International and domestic airlines for their passengers and cargo sales and is entitled to GSA commission from these Airlines. Notice u/s 143(2) of the Act was issued followed by another notice u/s 142(1). The assessee company had for the assessment year 2014-15 shown loans to body corporate to the tune of 25.95 crores. The Assessing Officer had called assessee to explain comme....
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....otal 170.97 Total 155.55 Loans to Body corporate (AY 2013-14) 26.66 5. It was also observed by Ld. AO that this table reveals that assessee company did not have enough funds to lend to the subsidiaries as bulk of its borrowed funds were invested in fixed assets, investment and debter and that is business activities. It thus, rejected the argument that the funds were lend to the subsidiaries out of surplus funds and went on to make addition, disallowing 60% of the interest and guarantee changes of Rs. 39,31,000/- amounting to Rs. 23,58,600/- adding it to the assessed income. 6. Assessee had challenged the same before the Ld. First A....
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....ccount of Finance Costs has also arisen in the appellant's own case in A.Y. 2010-11 to 2013-14 and the then Hon'ble CIT(A), New Delhi, after considering the above submission, while deciding the appellant's appeal for the aforesaid years, deleted the entire addition on this ground. In this order, I beg to differ from the decision of the Ld. CIT's(A) cited by the Appellant, as the observations made by the AO in the assessment order are found to be convincing." 7. Now before the Tribunal assessee has raised following grounds of appeal :- "Ground No. 1 The Ld. Commissioner of Income Tax (Appeals) - 36, New Delhi {hereinafter referred to as 'Ld. CIT(A)'}, has erred in law and on the facts and in the circumsta....
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.... Counsel for the assessee that in regard to the assessment years 2010-11 to 2012-13, the revenue appeals preferred against the order of Ld. CIT(A) bearing ITA No. 2712, 2713 and 6884/Del/2015 have been dismissed on 17.09.2018. Copy of which is placed on record. Ld. Counsel relied upon the following judgments to contend that if no interest disallowance is made for loans given in earlier years, the same cannot be made in subsequent years. "1) CIT v Sridev Enterprises [192 ITR 165 (Kar)] 2) CIT v. Industrial Cables (India) Ltd [209 CTR 167 (P&H)] 3) Escorts Ltd. v. ACIT [104 ITD 427 (Del)] 4) Malwa Cotton Spg. Mills v. ACIT [89 ITD 65 (TM)(Chd)] 5) ITO v. J.M.P. Enterprises [101 ITD 324 (SMC)(Asr)] ....
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....e relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcomber's case (Supra) the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. ....
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....inding of the Ld. AO that assessee company did not have enough funds to lend to the subsidiaries as bulk of its borrowed funds were invested in fixed assets, investments and debtors, so lending of funds to subsidiaries out of surplus fund, is not sustainable and is a finding not backed by any valid reasons. 14. As a matter of fact, these loans to body corporate and two subsidiaries were not new but were part of previous assessments. The commercial expediency, factor has to be examined at the initial stage when money is lend and there cannot be year to year basis explanation of commercial expediency of giving interest free funds, to its subsidiaries, by assessee. 15. The fact that the revenue appeals stand dismissed in regard to the as....