2008 (5) TMI 673

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....s, with him) for the appellant. None appeared for the respondent.           ORDER 1. None appears for the respondent, though served. 2. Leave granted. 3. These Civil Appeals are filed by the Department against the decision of the Division Bench of the Gujarat High Court dated 20th December, 2006 in Tax Appeals No.918 of 2006 and 919 ....

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....re concerned with the Assessment Years 1996-97 and 1997-98. The Assessing Officer found that the borrowed funds were invested to acquire control of AEC. Accordingly, he disallowed the interest expenses under Section 36(1)(iii). This was on the footing that the assessee had paid interests to Torrent Financiers and Torrent Leasing and Finance Private Limited (sister companies of the assessee). Accor....

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....s arranged mainly from  the Torrent Group (sister companies) along with two other companies only to enable the Torrent Group to acquire and take over the business of AEC. 6. The question, therefore, which arose for consideration before the High Court was: Whether the assessee was entitled to deduction in respect of interests paid by it to the Torrent Group? Prima facie, it appears to us th....