TaxTMI 
TaxTMI 
2009 (1) TMI 4
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....e investments without using the interest bearing funds even though the Balance Sheet of the Assessee Company as at 31.03.1999 shows that the Assessee Company has no reserve or own funds for making the investments in the sister concern and therefore, borrowed funds have been utilized and interest on these borrowed funds are rightly disallowed by the Assessing Officer? 2. We may also mention that in Appeal Memo the Revenue had raised the following question:- (B) Whether on the facts and in the circumstance of the case and in law the Hon'ble Tribunal was right in holding that advances to sister concerns were for business purposes even though the Assessee Company is not in the business of investments and there is nothing on reco....
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.... a view to build long term business prospects. Investments were in the regular course of business and accordingly no part of interest can be disallowed when the fund is utilized for the purpose of business. It was also pointed out that respondent had borrowed Rs. 43.62 crores by way of issue of Debentures and the said amount was utilised as capital expenditure and inter corporate deposit. It was the submission that no part of the interest bearing fund have gone into investments in the two companies. In so far as funds are concerned it was pointed out that income from operation of the company was Rs. 418.04 crore which was evenly distributed. Considering this, till December, 1999 the appellant had earned Rs. 313.53 crore from ....
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....d and interest on these investments are for non-business purposes and hence rightly disallowed by the Assessing Officer. 9. On the other hand on behalf of the Assessee the learned Counsel relied on the order of C.I.T. (Appeal) and submitted that the assessee had total interest free fund of Rs. 398 crores. 10. From the facts on record the learned Tribunal was pleased to record a finding that the assessee had sufficient funds of its own for making the investment without using the interest bearing funds and accordingly upheld the order of C.I.T. (Appeal). It is this order which is the subject matter of the present Appeal. 11. At the hearing of this Appeal on behalf of the Appellant learned Counsel submits that the order of the Tr....
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....tend or argue their case that the shareholders funds to the tune of over Rs. 172 crores was utilised for the purpose of fixed assets in terms of the balance sheet as on 31^st March, 1999, is fallacious. Firstly, we are not concerned with the balance sheet as of 31^st March, 1999. What would be relevant would be balance sheet as on 31^st March, 2000. Apart from that, the learned Counsel has been unable to point out to us from the balance sheet that the balance sheet as on 31^st March, 1999 showed that the shareholders funds were utilised for the purpose of fixed assets. To our mind the profit and loss account and the balance sheet would not show whether shareholders funds have been utilised for investments. The argument has to be reject....