2010 (3) TMI 1298

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....) of the Act in respect of interest of Rs. 21,74,234/- on amount borrowed from Corporation bank to purchase shares of Shaw Wallace and Company Limited on behalf of itself and other firm? 2. Whether the assessee and its beneficiaries who borrowed a sum of Rs. 3,80,00,000/- and transferred the same to M/s. Gayathri Holding Private Limited who inturn advanced this amount to G. Venkateshwaran to purchase shares on his behalf and on behalf of M/s. Sujatha Films Limited, Sujatha Productions Private Limited, Aruna International Private Limited and Sujatha Estate (Private) Limited, from Shaw Wallace and Company Limited is nothing but a colourable devise adopted to seek benefit of interest allowance under Section 36(1)(iii) of the Income- t....

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....the order of the Tribunal has filed this appeal. 2. We have heard the learned counsel for the parties. 3. The main contention of the revenue before us is that when the assessee has raised a loan from the Bank and has paid interest on the loan borrowed by it, the assessee was required to utilize the borrowed funds for the purpose for which it was raised from the Bank. According to the revenue, the assessee instead of utilizing the money borrowed from the Bank has passed on the same to its sister concern, M/s. Gayathri Holdings Private Limited which company has retained the amount of the assessee, thereby the assessee is made to pay interest on the entire borrowings even though the amount borrowed by it has not been utilized for the pur....

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....,80,00,000/- transferred to M/s. Gayathri Holdings Private Limited, certain amounts of shares of Shaw Wallace and Company are also transferred to the name of the assessee. Therefore, we are of the view that the Assessing Officer was justified in granting the relief to the assessee in respect of the value of the shares purchased by it through M/s. Gayathri Holdings Private Limited in respect of shares of Shaw Wallace and Company Limited. We are also of the view that the Assessing Officer is justified in disallowing the interest paid by the assessee to the Bank in respect of the amount which was lying with M/s. Gayathri Holdings Private Limited in the account of the assessee. 6. Though an attempt is made by the learned counsel for the r....