TaxTMI 
TaxTMI 
2023 (3) TMI 323
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.... in refiling the appeal is condoned. Main cases This order shall dispose of two income tax appeals i.e. ITA No. 407 of 2011 and ITA No. 33 of 2012 as the issue involved in both the appeals is identical. For the sake of brevity, facts are being extracted from ITA-407-2011. The appellant has come up in appeal against the order dated 13.05.2011 (Annexure A-4) of the Income Tax Appellate Tribunal, Chandigarh (for short 'Tribunal') for the assessment year 2006-07. The Tribunal was examining the appeal filed by the Department against the order passed by the learned CIT(A) on 30.04.2010, on the following grounds:- "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in allowing appeal of the asse....
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....e of the assessment proceedings, it was noticed that an amount of Rs.3,11,22,866/- has been given as advance to Directors, relatives of Directors and to companied in which Directors have substantial interest and no interest has been charged in spite of the facts that the company is paying interest on loans taken from banks and other financial institutions. The interest so paid has been claimed as expenses by the assesee. The interest paid on such loans amounting to Rs.13,61,450/- is disallowed on pro-rata basis. Thus addition to the tune of Rs.13,61,450/- is being made to the taxable income of the assessee. Penalty proceeding u/s 271(1)(c) for furnishing inaccurate particulars/concealment of the income are being initiated separately on this....
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.... passed by the ld. CIT(A), the revenue went in appeal and the Tribunal observed that a sum of Rs.49,38,930/- was given as interest-free loan to Shri A.S. Bhatia, maternal uncle of the Managing Director of the assessee-company and a sum of Rs.2,19,82,821/- was given as unsecured loan to Punjab Biotechnology Plant Ltd., a sister concern of the assessee-company. The Tribunal further observed that Shri A.S.Bhatia, was the maternal uncle and the assessee-company itself treated the amount standing in his name as loan given by the assessee to him. The auditors of the assessee-company had treated this loan as prejudicial to the interest of the assessee. The opinion of the auditors was that the action of the assessee in giving interest-free loans to....
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....dmitted on 20.07.2012, only for considering the following substantial question of law:- "Whether in the facts and circumstances of the case the ITAT was right in law in applying the ratio of this Hon'ble Court in the case of CIT Vs. Abhishek Industries 286 ITR Page 1 when no diversion of interest bearing funds had been made to Shri A.S.Bhatia?" Learned counsel for the appellant has referred to the judgment passed by Hon'ble Supreme Court in Civil Appeal No. 514 of 2008 titled Hero Cycles (P) Ltd. Vs. Commissioner of Income Tax (Central), Ludhiana. In the said case, the Hon'ble Supreme Court had examined the advance/loan given to the Directors. The assessee-company had reserve/surplus of almost Rs.15 crores and it had given l....
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....s transaction carried out by the company after taking loan from the bank. The question of liability has already been answered in favour of the assessee by the Supreme Court in Hero Cycles's case (supra) wherein the judgment passed in 'Abhishek Industries' (supra) has been overrurled. The judgment of Hero Cycles's case (supra) has, thereafter, been followed by this Court in Principal Commission of Income Tax vs. Holy Faith International (P) Ltd, ITA No. 87 of 2017, decided on 24.07.2017 and the benefit of interest was allowed under Section 36(1)(iii) by this Court. In paras No. 7, 8, 9 and 10, it was observed as under:- "7. Further, the judgment in the case of 'Abhishek Industries' (supra) relied upon by both the Authorities below ....