Tupelo Construction Pvt. Ltd., New Delhi V. DCIT, Circle- 25(2), New Delhi

ITA 2427/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5188 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 09-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: GAUTAM JAIN SHRI LALIT MOHAN
• Keywords: Business income; Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2427/DEL/2018 AY: 20 14-15 TUPELO CONSTRUCTION PVT. LTD., VS DCIT, 296, FOREST LANE, CIRCLE 25(2), NEB SARAI, NEW DELHI. SAINIK FARMS, NEW DELHI-110066 (PAN: AAECT3335J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAUTAM JAIN, ADVOCATE SHRI LALIT MOHAN, ADVOCATE DEPARTMENT BY : SHRI RAVI KANT GUPTA, SR. DR DATE OF HEARING: 18.07.2018 DATE OF PRONOUNCEMENT: 11.10.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 5.2.2018 PASSED BY THE LD. CIT (APPEALS )-9, NEW DELHI FOR A.Y. 2014-15. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT , 1961 ('THE ACT') AT A TOTAL INCOME OF RS. 2,29,03,330/- AGAINS T RETURNED LOSS OF RS.1,63,86,529/- AFTER MAKING A DISALLOWANCE ON ACCOUNT OF INTEREST EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 2 THE ASSESSING OFFICER (A.O. FOR SHORT) HAD NOTICED THAT INTEREST EXPENSES OF RS. 3,92,89,856/- HAD BEEN CLAIMED BY T HE ASSESSEE COMPANY. DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE COMPANY HAD TAKEN LOAN FROM YES BANK F OR THE PURPOSE OF PAYMENT OF ADVANCE TO SUB CONTRACTORS TO WARDS EXECUTION OF EPC CONTRACT. OUT OF THE SAID LOAN AM OUNT, RS. 36 CRORES WAS GIVEN TO M/S IIC LIMITED. FURTHER, THE ASSESSEE COMPANY HAD INVESTED RS. 14.72 CRORES IN OCD OF ITS SISTER CONCERN M/S INNUS INFRASTRUCTURE (P) LTD. FROM WHIC H NO INCOME HAD BEEN RECEIVED BY THE ASSESSEE COMPANY. THE AO FORMED AN OPINION THAT THE ASSESSEE COMPANY DID NOT USE THE L OAN FOR ITS OWN CONSTRUCTION BUSINESS AND OUT OF THE SAID LOAN, RS. 36 CRORES WAS GIVEN TO M/S IIC LTD. AS LOAN AND THE COMPANY H AD FURTHER INVESTED RS. 14.72 CRORES IN OCD OF ITS SISTER CONC ERN M/S INNUS INFRASTRUCTURE (P) LTD. THE ASSESSMENT WAS COMPL ETED AT A TOTAL INCOME OF RS. 2,29,03,330/- AFTER MAKING A DISALLOW ANCE OF RS. 3,92,89,856/- U/S 36(1)(III) OF THE ACT. 2.1 ON APPEAL BY THE ASSESSEE BEFORE THE LD. COMMIS SIONER OF INCOME TAX (APPEALS), THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) DISMISSED THE GROUNDS OF THE ASSESSEE AND NOW THE ASSESSEE IS IN APPEAL AND HAS CHALLENGED THE UPHOLD ING THE ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 3 DISALLOWANCE OF CLAIM OF DEDUCTION OF RS. 3,92,89,8 56/- REPRESENTING INTEREST PAID ON LOANS RAISED FOR BUSI NESS PURPOSES AND ELIGIBLE FOR DEDUCTION U/S 36(1)(III) OF THE AC T BY RAISING THE FOLLOWING GROUNDS: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACT S IN UPHOLDING DISALLOWANCE OF A CLAIM OF DEDUCTION OF R S. 3,92,89,856/- REPRESENTING INTEREST PAID ON LOANS R AISED FOR BUSINESS PURPOSES AND ELIGIBLE FOR DEDUCTION U/ S 36(L)(III) OF THE ACT. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS UPHELD THE DISALLOWANCE BY FAILING TO APPRECIATE THE FACT AND CIRCUMSTANCES OF THE CASE O F THE APPELLANT, STATUTORY PROVISIONS OF LAW AND EVIDENCE ON RECORD, INCLUDING THE SUBMISSIONS FILED BY THE APPE LLANT COMPANY. 1.2 THAT THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT INVESTMENT IN OCD AMOUNTING TO RS. 14.72 CRORES IN ONE OF ITS GROUP C ONCERN NAMELY M/S INUUS INFRASTRUCTURE (P) LTD. HAS BEEN M ADE OUT OF RS. 12 CRORES RECEIVED FROM M/S CLETA INFRAC ON PVT. LTD. ON WHICH NO INTEREST EXPENDITURE INCURRED HAS NOT FILED ANY COGENT EVIDENCE OR DOCUMENT TO BUTTRE SS ITS CLAIM OF THE SAID INVESTMENT IN THE OCD HAS BEEN OU T OF THE INTEREST FREE BORROWINGS IS FACTUALLY INCORREC T, CONTRARY TO EVIDENCE ON RECORD AND THEREFORE UNSUSTAINABLE. 1.3 THAT FURTHERMORE EVEN THE CONCLUSION THAT ADVANCING OF LOAN IN THE GROUP CONCERN IN TERMS OF INVESTMENT IN OCD HAS BEEN AS A MEASURE IN COMMERCI AL EXPEDIENCY HAS NOT BEEN ESTABLISHED IS ALSO NOT BAS ED ON CORRECT APPRECIATION OF FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT ALONGWITH EVIDENCE PLACED ON RECORD AND THEREFORE UNTENABLE. ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 4 1.4 THAT EVEN THE FINDING THAT APPELLANT IS NOT E NGAGED IN THE BUSINESS OF FINANCING FAILS TO APPRECIATE TH E FACTUAL MATRIX OF THE APPELLANT COMPANY FOR THE YEA R UNDER CONSIDERATION. 1.5 THAT IN ANY CASE AND WITHOUT PREJUDICE THAT DISALLOWANCE MADE IS HIGHLY ARBITRARY AND EXCESSIVE THEREFORE UNSUSTAINABLE. 1.6 THAT VARIOUS ADVERSE FINDINGS AND CONC LUSION RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE ALSO FACTUALLY INCORRECT, CONTRARY TO RECORD, LEGALLY MISCONCEIVED AND UNTENABLE. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ERRONEOUS FINDING OF FACT OF THE LEAR NED ASSESSING OFFICER THAT THE MONEY WAS BORROWED FOR N ON BUSINESS PURPOSES. 3 WITHOUT PREJUDICE TO THE EACH OF THE ABOVE G ROUNDS THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ACT ION OF THE LEARNED ASSESSING OFFICER WHO TREATED THE INTER EST INCOME AS BUSINESS INCOME ON ONE HAND AND REJECTED THE CLAIM OF INTEREST EXPENSES ON THE OTHER. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEARNED ASSESSING OFFICER WAS CORRECT INITIATING THE PENALTY PROCEEDINGS DISREGARDING THE FACT THAT THE ASSESSEE NEITHER CONCEALED ANY PARTICULARS NOR SUBMITTED ANY INACCURATE INFORMATION. 5 THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR OMIT ANY OF THE ABOVE GROUNDS OF APPEAL AS THE CIRCUMSTANCES MY WARRANT. IT IS THEREFORE PRAYED THAT DISALLOWANCE MADE AND SUSTAINED OF RS. 3,92,89,856/- MAY KINDLY BE DELETE D AND APPEAL OF THE APPELLANT COMPANY BE ALLOWED. ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 5 3.0 THE LD. AR DREW OUR ATTENTION TO THE CHART TABU LATED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AT PAG E 3 OF THE ORDER WHICH IS AS UNDER: DETAILS OF LOAN TAKEN OUTSTANDING AS ON 31.3.2014 AND INTEREST INCURRED THEREON DETAILS OF LOAN GIVEN OUTSTANDING AS ON 31.3.2014 AND INTEREST EARNED THEREON NAME OF LENDER AMOUNT OF LOAN (IN RS.) INTEREST INCURRED NAME OF BORROWER AMOUNT OF LOAN (IN RS.) INTEREST EARNED YES BANK 40,70,00,000 3,92,89,856 IIC LIMITED 36,00,00,000 2,98,99,727 CLETA INFRACON (P) LTD. 12,00,00,000 NIL INNUS INFRASTRUCTURE PVT. LTD. (INVESTMENT IN OCD) 14,72,30,000 NIL TOTAL 52,70,00,000 3,92,89,856 TOTAL 50,72,30,000 2,98,99,727 3.1 ON THE BASIS OF THE AFORESAID, IT WAS CONTENDED BY THE LD. AR THAT THE ASSESSEE HAD DECLARED INTEREST INCOME IN RESPECT OF LOAN TO M/S. IIC LTD. OF RS. 2,98,99,727/-. IT WAS CONTENDED THAT THE DISALLOWANCE OF THE CLAIM OF DEDUCTION IN ENTIR ETY WAS EX FACIE NOT TENABLE. IT WAS FURTHER SUBMITTED THAT THE INVE STMENT IN OCDS WERE OUT OF THE INTEREST FREE LOAN OF RS. 12,0 0,00,000/- FROM THE HOLDING COMPANY M/S. CLETA INFRACON (P) LT D. AND, THUS, THERE WAS NO DIVERSION OF FUNDS FOR NON-BUSINESS PU RPOSES. IT WAS SUBMITTED THAT QUANTUM OF INTEREST INCOME CANNO T BE A GROUND TO DENY THE ELIGIBILITY OF INTEREST EXPENDIT URE INCURRED IN THE COURSE OF BUSINESS BY THE ASSESSEE COMPANY. IT WAS HIGHLIGHTED THAT INTEREST PROCESSING FEE OF RS. 69, 72,591/- STOOD ALLOWED AS DEDUCTION AND, THEREFORE, EVEN LOGICALLY , ONCE THE ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 6 EXPENDITURE OF PROCESSING FEE STOOD ALLOWED, EXPEND ITURE OF INTEREST HAS TO BE ALLOWED AS SUCH. 4.0 THE LEARNED SR. DR, ON THE OTHER HAND, PLACED R ELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW FOR DISALLOWANC E OF INTEREST. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE RELEVANT MATERIAL PLACED BEFORE US. ALL THE GR OUNDS THAT ARE RAISED RELATE TO DISALLOWANCE OF A CLAIM OF DEDUCTI ON OF RS. 3,92,89,856/- BEING EXPENDITURE ON INTEREST CLAIMED U/S 36(1)(III) OF THE ACT. THE FACTUAL MATRIX EMANATING FROM THE ORDERS BELOW, UNDISPUTEDLY, IS THAT THE ASSESSEE HAD RAISED A LOA N OF RS. 40.70 CRORES FROM YES BANK. IT HAS ALSO BEEN NOTED BY THE LD. CIT (A) THAT THE ASSESSEE HAD ALSO RAISED LOAN OF RS. 12 CR ORES FROM ITS HOLDING COMPANY M/S CLETA INFRACON (P) LTD. THE ABO VE FUNDS AGGREGATING TO RS. 52.70 CRORES HAD BEEN UTILIZED E ITHER IN RESPECT OF LOAN TO M/S. IIC LTD. OF RS. 36 CRORES AND/OR IN VESTMENT IN OCDS OF INNUS INFRASTRUCTURE (P) LTD. OF RS. 12 CRO RES. IN RESPECT OF LOAN TO IIC LTD., THE ASSESSEE HAD EARNED INCOME OF RS. 2.99 CRORES AND THEREFORE, THERE WAS NO JUSTIFICATION TO DENY THE DEDUCTION OF EXPENDITURE INCURRED ON THE LOAN RAISE D FROM YES BANK AND UTILIZATION THEREOF TOWARDS LOAN TO IIC LT D. FURTHERMORE, IT IS NOTED THAT THE ASSESSEE HAD MADE INVESTMENT ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 7 IN OCDS OUT OF THE INTEREST FREE BORROWINGS OF RS. 12 CRORES. IT IS WELL SETTLED LAW THAT ONCE INTEREST FREE FUNDS ARE AVAILABLE THEN TO THAT EXTENT, NO DISALLOWANCE CAN BE MADE UNDER SECT ION 36(1)(III) OF THE ACT. IT IS ALSO PERTINENT THAT THE PROCESSI NG FEES OF RS. 62 LACS INCURRED ON THE BORROWINGS MADE FROM YES BANK WERE ALLOWED AS DEDUCTION. THE HONBLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. 3 13 ITR 340 HAS HELD AS UNDER: 10. IF THERE BE INTEREST-FREE FUNDS AVAILABLE TO A N ASSESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST-FREE FUNDS AVAIL ABLE. IN OUR OPINION THE SUPREME COURT IN EAST INDIA PHARMAC EUTICAL WORKS LTD.'S CASE (SUPRA) HAD THE OCCASION TO CONSI DER THE DECISION OF THE CALCUTTA HIGH COURT IN WOOLCOMBERS OF INDIA LTD.'S CASE (SUPRA) WHERE A SIMILAR ISSUE HAD ARISE N. BEFORE THE SUPREME COURT IT WAS ARGUED THAT IT SHOULD HAVE BEEN PRESUMED THAT IN ESSENCE AND TRUE CHARACTER THE TAX ES WERE PAID OUT OF THE PROFITS OF THE RELEVANT YEAR AND NO T OUT OF THE OVERDRAFT ACCOUNT FOR THE RUNNING OF THE BUSINESS A ND IN THESE CIRCUMSTANCES THE APPELLANT WAS ENTITLED TO CLAIM T HE DEDUCTIONS. THE SUPREME COURT NOTED THAT THE ARGUME NT HAD CONSIDERABLE FORCE, BUT CONSIDERING THE FACT THAT T HE CONTENTION HAD NOT BEEN ADVANCED EARLIER IT DID NOT REQUIRE TO BE ANSWERED. IT THEN NOTED THAT IN WOOLCOMBERS OF I NDIA ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 8 LTD.'S CASE (SUPRA) THE CALCUTTA HIGH COURT HAD COM E TO THE CONCLUSION THAT THE PROFITS WERE SUFFICIENT TO MEET THE ADVANCE TAX LIABILITY AND THE PROFITS WERE DEPOSITED IN THE OVERDRAFT ACCOUNT OF THE ASSESSEE AND IN SUCH A CASE IT SHOUL D BE PRESUMED THAT THE TAXES WERE PAID OUT OF THE PROFIT S OF THE YEAR AND NOT OUT OF THE OVERDRAFT ACCOUNT FOR THE R UNNING OF THE BUSINESS. IT NOTED THAT TO RAISE THE PRESUMPTIO N, THERE WAS SUFFICIENT MATERIAL AND THE ASSESSEE HAD URGED THE CONTENTION BEFORE THE HIGH COURT. THE PRINCIPLE THE REFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABLE BOTH INT EREST-FREE AND OVERDRAFT AND/OR LOANS TAKEN, THEN A PRESUMPTIO N WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST -FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INT EREST-FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. IN T HIS CASE THIS PRESUMPTION IS ESTABLISHED CONSIDERING THE FIN DING OF FACT BOTH BY THE CIT (APPEALS) AND ITAT. 5.1 ALSO THE HONBLE DELHI HIGH COURT IN THE CASE OF CI T V. DD INDUSTRIES LTD REPORTED IN 231 TAXMAN 784 (DEL), F OLLOWING THE EARLIER JUDGMENT IN THE CASE OF CIT VS. BHARTI TELE VENTURES LTD. REPORTED IN 331 ITR 502 (DEL), HAS HELD AS UNDER: 10. THE RECORD BEFORE THE ITAT SHOWED THAT THE PAI D UP EQUITY OF THE ASSESSEE WAS RS.8,00,00,000/- FOR ALL THE YEARS, I.E., AS ON 31.03.2006; 31.03.2007, 31.03.20 08 AND 31.03.2009. THE GENERAL RESERVES AND SURPLUS AS ON 31.03.2006 WAS RS.14,68,82,450; AS ON 31.03.2007, I T WAS RS.16,36,68,384/-; AS ON 31.03.2008, IT WAS ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 9 RS.17,10,43,019/- AND AS ON 31.03.2009 IT WAS RS.15,28,48,354/-. SUNDRY DEBTORS AS ON 31.03.2006 WAS RS.22,82,38,320/-; AS ON 31.03.2007 IT WAS RS.28,58,66,349/-; AS ON 31.3.2008 IT WAS RS.22,53,78,479/-; AS ON 31.03.2009 STOOD AT RS.11,61,95,359/-. THUS, THERE IS MATERIAL TO SHOW THAT THE AMOUNTS WERE NOT IN FACT ADVANCED FOR THE ASSESSMEN T YEARS IN QUESTION, I.E., 2007-08, 2008-09 AND 2009-10. TH E ASSESSEE HAD PROVIDED FURTHER MATERIAL DISCLOSING T HAT THE LOANS TAKEN WERE FOR SPECIFIC PURPOSES FROM DIFFERE NT FINANCIAL INSTITUTIONS SUCH AS PURCHASE OF CARS, STOCKS, RAW MATERIALS ETC. THESE SUPPORTED ITS CONTENTIONS THAT ADEQUATE FUNDS WERE AVAILABLE DURING THE ASSESSMENT YEARS AND THAT SINCE IN THE PAST THE REVENUE HAD ACCEPTED THE ASSESSEE'S PL EA IN THIS REGARD AND NOT BROUGHT THE AMOUNTS TO TAX UNDE R SECTION 36 (1) (III), THERE WAS NO QUESTION OF ITS BEING BR OUGHT TO TAX FOR THE THREE ASSESSMENT YEARS IN QUESTION. APPLYIN G THE RATIO IN SAHARA INDIA CORPN. LTD. (SUPRA), IT IS HELD THA T THE REVENUE COULD NOT HAVE TAKEN A DIFFERENT VIEW FOR T HESE THREE YEARS, PARTICULARLY, WHEN ADVANCES WERE NOT MADE AT THIS TIME WITHOUT ANY CONCLUSION THAT IN FACT GENERAL RE SERVES, SURPLUSES AND OTHER FUNDS WERE NOT AVAILABLE. THE C OURT HERE ALSO NOTICES THAT SEVERAL DECISIONS WERE RELIED UPO N BY THE ITAT (CIT V. RELIANCE UTILITIES & POWER LTD. [2009] 313 ITR 340/178 TAXMAN 135 (BOM.), CIT V. HOTEL SAVERA [199 9] 239 ITR 795/102 TAXMAN 247 (MAD), CIT V. TIN BOX CO. [2003] 260 ITR 637/[2004] 135 TAXMAN 145 (DELHI )) IN SUPPORT OF THE CONCLUSION THAT WHEN THE ASSESSEE IS ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 10 POSSESSED OF MIXED FUNDS WHICH INCLUDE ITS OWN FUND S IN SUFFICIENT QUANTITY, A PRESUMPTION THAT ITS OWN FUN DS WERE UTILIZED FOR THE ADVANCES IS TO BE DRAWN. 11. THE NEXT ASPECT IS AS REGARDS THE QUESTION WHET HER THE PURPOSE FOR WHICH THE LOAN WAS GIVEN, I.E., TO BOOK 40,000 SQ. FT. PROPERTY FOR THE ASSESSEE'S USE IN AN UPCOMING COMMERCIAL COMPLEX WAS SUFFICIENT. WE NOTICE THAT THE ITAT HEL D AGAINST THE REVENUE ON THIS ASPECT. THE ITAT NOTED THE TERM S OF THE MEMORANDUM OF UNDERSTANDING (MOU) DATED 28.05.2005 ENTERED INTO WITH D.D. PROPERTIES WHERE IT HAD AGRE ED TO INVEST MONEY IN THE PROJECT BY WAY OF ADVANCE. THIS DOCUMENT HAD NOT BEEN REJECTED EITHER BY THE AO OR THE CIT (A). THE BALANCE SHEET OF D.D. PROPERTIES PVT. LTD. , A SISTER CONCERN WAS ALSO CONSIDERED BY THE ITAT. THIS DISCL OSED THAT AS ON 31.03.2006 IT HAD INVENTORIES IN THE FORM OF LAND TO THE EXTENT OF `32.4 CRORES. IN THESE CIRCUMSTANCES, GIV EN THE NATURE OF THE MOU, THE ITAT IN OUR OPINION RIGHTLY CONCLUDED THAT THE REVENUE'S REASONING WAS UNSOUND. THE ITAT ALSO RELIED UPON SASSOON J. DAVID & CO. (P.) LTD. V. CIT [1979] 118 ITR 261/1 TAXMAN 485 (SC). THIS COURT HAD IN A SIMILAR CONTEXT, HELD IN CIT V BHARTI TELEVENTURE L TD. [2011] 331 ITR 502/200 TAXMAN 39 (MAG.)/11 TAXMANN.COM 356 (DELHI) THAT: '11. THE HON'BLE SUPREME COURT FURTHER HELD THAT THOUGH, THE BORROWED AMOUNT WAS NOT UTILIZED BY THE ASSESSEE IN ITS OWN BUSINESS AND HAD BEEN ADVANCED AS AN INTEREST-FREE LOAN TO THE SISTER CONCERN, BUT THAT IS NOT RELEVANT. WHAT IS RELEVANT IS WHETHER THE ASSES SEE ADVANCED SUCH AMOUNT TO ITS SISTER CONCERN AS A MEASURE OF COMMERCIAL EXPEDIENCY? THE LAW LAID DOWN ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 11 BY THE BOMBAY HIGH COURT IN PHALTAN SUGAR WORKS LTD. V. CIT [1995] 215 ITR 582 WAS OVERRULED WHEREAS THAT OF THE DELHI HIGH COURT IN CIT V. DALM IA CEMENT (B.) LTD. [ 2002] 254 ITR 377 WAS APPROVED. IT WAS FURTHER HELD THAT IT ALL DEPENDS ON THE FACTS A ND CIRCUMSTANCE OF THE CASE AS TO WHETHER THE DIRECTOR S OF THE SISTER CONCERN UTILIZED THE AMOUNT ADVANCED TO IT BY THE ASSESSEE FOR THEIR PERSONAL BENEFIT, WHICH OBVI OUSLY COULD NOT BE SAID TO BE AN ADVANCE AS A MEASURE OF COMMERCIAL EXPEDIENCY. 5.2 IN SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINIO N, THE ASSESSING OFFICER OUGHT TO HAVE RESTRICTED THE COMP UTATION OF DISALLOWANCE TO THE EXTENT OF RS. 2.72 CRORES BEING THE DIFFERENCE BETWEEN THE INTEREST FREE FUNDS AVAILABLE OF RS. 12 CRORES AND INVESTMENT IN OCDS OF RS. 14.72 CRORES. THE ASSESSI NG OFFICER IS ACCORDINGLY DIRECTED TO RE-COMPUTE THE DISALLOWANCE OF INTEREST ON THE DIFFERENTIAL AMOUNT OF 2.72 CRORES. 6.0 IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 11 TH OCTOBER , 2018 GS ITA NO. 2427/DEL/2018 ASSESSMENT YEAR 2014-15 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 1