NATCO Pharma Ltd., Hyd, Hyderabad V. DCIT, Circle-16(1), Hyderabad, Hyderabad

ITA 259/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98505 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2015
• Court: TRIBUNAL
• Department Lawyers: S MO HARANA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Depreciation; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NOS. 258 & 259/HYD/2015 ASSESSMENT YEARS: 2005-06 & 2006-07 NATCO PHARMA LTD., HYDERABAD [PAN: AAACN6927A] VS THE D.C.I.T, CIRCLE-16(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR FOR REVENUE : SHRI S. MOHARANA, CIT-DR DATE OF HEARING : 25-08-2015 DATE OF PRONOUNCEMENT : 23-09-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE TWO ARE ASSESSEES APPEALS AGAINST THE SEPAR ATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD D ATED 30-01-2005. SINCE COMMON ISSUE IS INVOLVED IN BOTH THE APPEALS, ASSESSING OFFICER (AO) AND CIT(A)S ORDER BEING COMMON EXCEPT THE AMO UNTS INVOLVED, WE HAVE CONSIDERED THE APPEALS TOGETHER AND DISPOSED O F BY THIS COMMON ORDER. 2. WE HAVE HEARD THE LD. COUNSEL FOR ASSESSEE AND L D.CIT-DR IN DETAIL AND PERUSED THE PAPER BOOKS PLACED ON RECORD ALONG WITH THE ORDERS OF ITAT AND HONBLE HIGH COURT IN VARIOUS YE ARS. I.T.A. NOS. 258 & 259/HYD/2015 NATCO PHARMA LTD., :- 2 -: 3. THE ISSUE IN THESE APPEALS IS WHETHER THE AMOUNT S ADVANCED BY ASSESSEE TO ITS SISTER-CONCERNS WAS FOR COMMERCIAL EXPEDIENCY? IF NOT, WHETHER THE INTEREST CLAIMED BY ASSESSEE SHOULD BE DISALLOWED TO THE EXTENT OF RS. 2,76,68,393/- IN AY. 2005-06 AND RS. 1,09,56,429/- IN AY. 2006-07. 4. BRIEFLY STATED, ASSESSEE IS A COMPANY ENGAGED IN MANUFACTURE OF BULK DRUGS AND FORMULATIONS. IN AY. 2005-06, IT HA S FILED RETURN OF INCOME DECLARING PROFIT OF RS. 7,42,85,132/- BEFORE SET-OFF OF BROUGHT FORWARD DEPRECIATION LOSSES IN AY. 2005-06 AND ABOU T RS. 7,77,59,170/- IN AY. 2006-07. AO MADE VARIOUS ADDITIONS ONE BEIN G THE AMOUNTS IN DISPUTE- INTEREST PAID ATTRIBUTABLE TO INTEREST FRE E ADVANCES GIVEN TO SISTER-CONCERNS, ON THE REASON THAT ASSESSEE HAS AD VANCED FUNDS INTEREST FREE TO ITS SISTER-CONCERNS. AO AS IN EARL IER YEARS MADE DISALLOWANCE OF INTEREST OF RS. 2,76,68,393/- IN AY . 2005-06 AND RS. 1,09,56,429/- IN AY. 2006-07, OUT OF THE INTEREST C LAIM MADE BY ASSESSEE. IT WAS THE SUBMISSION OF ASSESSEE THAT I N EARLIER YEARS, PARTICULARLY FROM AY. 2002-03 ONWARDS, THESE ADVANC ES WERE HELD TO BE FOR BUSINESS PURPOSES BY THE ITAT AND SO NO DISALLO WANCE WAS WARRANTED. FURTHER, IT WAS SUBMITTED THAT ALL THE BORROWALS ARE FOR SPECIFIC PURPOSES AND NO PART OF THE BORROWED AMOUN T WAS ADVANCED TO SISTER-CONCERNS, THEREFORE DISALLOWANCE OF INTEREST DOES NOT ARISE. AO DID NOT AGREE AND CIT(A) ALSO CONFIRMED THE DISALLOWANC E SO MADE BY THE AO. THE MATTER WENT IN FURTHER APPEAL BEFORE THE ITAT A ND TRIBUNAL VIDE ITS ORDER IN ITA NO. 377/HYD/2009 (WRONGLY SHOWN AS 337 IN CIT(A)S ORDER) ITA NO. 487/HYD/2010 AND ITA NO. 686/HYD/2010 DT. 3 1-10-2012 HAS RESTORED THE ISSUE TO THE FILE OF AO TO EXAMINE WHE THER THERE IS MUTUAL TRANSACTIONS BETWEEN ASSESSEE AND ITS SISTER-CONCER NS AND IF SO, THE AO HAS TO CONSIDER WHETHER ADVANCES WERE MADE FOR COMM ERCIAL EXPEDIENCY? ITAT REMITTED THE ENTIRE ISSUE TO THE FILE OF AO TO CONSIDER THE ISSUE AFRESH AND DECIDE ACCORDINGLY. I.T.A. NOS. 258 & 259/HYD/2015 NATCO PHARMA LTD., :- 3 -: 5. IN THE CONSEQUENTIAL PROCEEDINGS, IT WAS EXPLAIN ED TO THE AO THAT THE FUNDS WERE GIVEN TO SISTER-CONCERNS FOR BUSINES S PURPOSES. AO DID NOT AGREE AND HELD THAT ASSESSEE HAS FAILED TO PROV E THE NEXUS BETWEEN LOANS OBTAINED AND ITS UTILITY ENTIRELY FOR THE PUR POSE OF BUSINESS. ASSESSEE ALSO CONTENDED THAT IT HAS CHARGED INTERES T IN A LATER YEAR AND SINCE INTEREST AMOUNT WAS ALREADY ACCOUNTED FOR AND ASSESSED, THERE IS NO NEED FOR DISALLOWANCE OF THE INTEREST CLAIM ON B ORROWED FUNDS DURING THE ASSESSMENT YEARS. AO DID NOT AGREE WITH THE CO NTENTIONS AND DISALLOWED THE INTEREST ATTRIBUTABLE TO THE AMOUNTS ADVANCED TO THE SISTER-CONCERNS AS ABOVE, AS IN THE ORIGINAL ORDER. 6. LD. CIT(A) HAS SUMMARIZED ASSESSEE SUBMISSI ONS IN PARA 7 OF THE ORDER AS UNDER: 1. THE ADVANCES WERE MADE OUT OF OWN FUNDS AND NOT BORROWED FUNDS IN RESPECT OF WHICH A CLEAR FINDING HAS BEEN GIVEN BY THE APPELLATE TRIBUNAL IN ASSESSMENT YEAR 2002-0 3 VIDE PARA 44 OF THE ORDER. 2. THE BORROWINGS OF THE COMPANY HAVE IN FACT REDUC ED FROM RS. 103.87 CRORE IN F.Y. 2003-04 TO RS. 85.09 IN F. Y. 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. 3. THE INCOME TAX APPELLATE TRIBUNAL HAS HELD IN TH E EARLIER YEARS THAT THE ADVANCES ARE GIVEN FOR THE PURPOSE O F BUSINESS. 4. THE ASSESSING OFFICER OUGHT TO HAVE SEEN THAT RI GHT TO RECEIVE INTEREST ARISES ONLY WHERE THE BOARD OF DIR ECTORS HAS DECIDED TO CHARGE INTEREST ON THE LOAN. THIS HAS B EEN CONFIRMED BY THE ITAT IN ASSESSMENT YEAR 2007-08 PARA 21 (COPY O F THE ORDER DATED 29.022012 ENCLOSED). 5. THE DEPARTMENTAL APPEAL AGAINST THE ABOVE ORDER OF ITAT HAS BEEN DISMISSED BY THE HON'BLE HIGH COURT OF AP VIDE ITS ORDER DATED 18.09.2013 (COPY ENCLOSED). THEREFORE THERE IS NO JUSTIFICATION FOR THE PRESENT ORDER OF THE ASSESSING OFFICER. 6. IN ANY CASE THE INTEREST PERTAINING TO ALL THE E ARLIER YEARS HAS BEEN ACCOUNTED AS INCOME WHEN THE BOARD OF THE COMPANY PASSED A RESOLUTION TO CHARGE INTEREST. SUCH INTER EST AMOUNTED TO RS. 11,60,82,000/- IN THE CASE OF KRISHNAPATNAM POR T CO. LIMITED I.T.A. NOS. 258 & 259/HYD/2015 NATCO PHARMA LTD., :- 4 -: ACCOUNTED IN ASSESSMENT YEAR 2006-07 AND RS. 5,96,2 9,676/- IN THE CASE OF NATCO ORGANICS LIMITED ACCOUNTED IN ASS ESSMENT YEAR 2008-09. TAXES DUE HAVE ALREADY BEEN PAID ACCORDIN GLY. 7. THE ACTION OF THE ASSESSING OFFICER RESULTS IN T HE SAME INCOME BEING TAXED IN TWO DIFFERENT YEARS. 7. LD. CIT(A) CONSIDERING THE SUBMISSIONS OF ASSESS EE AND ORDERS OF THE AO DID NOT AGREE WITH ASSESSEE AND UPHELD THE A DDITIONS MADE BY THE AO BY STATING AS UNDER: 8. THE FACTUAL POSITION AS EMANATING FROM THE ASS ESSMENT ORDER, THE ORDER OF ITAT AND ITS DIRECTIONS AND THE SUBMISSIONS OF THE ASSESSEE ARE CONSIDERED. IT IS SEEN THAT THE F INDINGS OF THE ITAT FOR THE EARLIER YEARS, THE DETAILS REGARDING THE SO URCES OF FUNDS FOR INTEREST FREE ADVANCES TO M/S. NATCO ORGANICS LTD., THE ASSESSEES CONTENTION REGARDING OFFERING INTEREST TO TAX IN A. Y. 2008-09 WERE ALL BEFORE THE HON'BLE ITAT WHILE GIVING THE DIRECTIONS AS MENTIONED AT PARA 3 SUPRA. AFTER CONSIDERING THE ITAT ORDERS FO R THE EARLIER YEARS AND VARIOUS SUBMISSIONS MADE BY THE ASSESSEE, THE H ON'BLE ITAT HAS DEEMED IT FIT TO ISSUE ABOVE DIRECTIONS. ACCOR DINGLY, ONLY ISSUE NOW FOR CONSIDERATION IS WHETHER THE DIRECTION OF I TAT HAVE BEEN FOLLOWED OR NOT. IT IS SEEN FROM THE DIRECTIONS TH AT THE ASSESSING OFFICER IS REQUIRED TO EXAMINE WHETHER THERE IS MUT UAL TRANSACTION BETWEEN THE ASSESSEE AND ITS SISTER CONCERNS, I.E., BUYING AND SELLING OR RENDERING OF SERVICES BETWEEN THE ASSESS EE AND THE SISTER CONCERNS IN THIS ASSESSMENT YEAR ALSO. IF IT IS SO , THE ASSESSING OFFICER HAS TO CONSIDER THAT THE ADVANCES WERE MADE ON ACCOUNT OF COMMERCIAL EXPEDIENCY. ON THIS ISSUE THE AO HAS GI VEN A CLEAR FINDING THAT: THE ASSESSEES AR VIDE LETTER DATED 26-08-2013 FOR A.YRS. 2005-06 AND 2006-07 HAS SUBMITTED THAT THE ASSESSEE HAD NO TRANSACTIONS OF PURCHASE OR SALE OF MATERIALS BETWE EN NATCO PHARMA LTD AND NATCO ORGANICS LTD., DURING THE YEAR AS THE PLANT OF NATCO ORGANICS LTD WAS UNDER CONSTRUCTION DURING THE YEAR AND FURTHER, THE PRODUCTION STARTED IN THE SAID CONCERN ONLY DUR ING THE FINANCIAL YEAR 2011-12. IT IS CLEAR FROM THE ABOVE THAT THER E IS NO NEXUS OF ANY COMMERCIAL EXPEDIENCY FOR THE SAID ADVANCE OR LOAN GIVEN BY THE ASSESSEE COMPANY TO ITS SISTER CONCERN FOR THE ASSE SSMENT YEAR UNDER CONSIDERATION, AS THE SAID SISTER CONCERN WAS STILL UNDER THE PROCESS OF BEING SET UP. ON THIS COUNT ALSO, THE CLAIM OF THE ASSESSEE THAT AS THE RELIEF WAS ALLOWED ON THE BASIS OF COMMERCIAL E XPEDIENCY IN EARLIER YEARS BY THE HON'BLE ITAT AND THE SAME SHOU LD BE CONSIDERED FOR THE YEAR UNDER CONSIDERATION, IS NOT ACCEPTABLE . I.T.A. NOS. 258 & 259/HYD/2015 NATCO PHARMA LTD., :- 5 -: 9. THE ABOVE FINDING HAS NOT BEEN CONTROVERTED BY T HE ASSESSEE NOR ANY SUBMISSION MADE IN THIS REGARD. I N VIEW OF THE ABOVE, I UPHOLD THE ADDITION MADE BY THE AO AND THE ABOVE GROUNDS OF APPEAL ARE DISMISSED. 8. LD. COUNSEL SUBMITTED THAT ITAT IN EARLIER YEARS ACCEPTED THAT ADVANCES WERE GIVEN FOR THE PURPOSE OF BUSINESS AND IN LATER YEAR ALSO IN AY. 2007-08 AGAIN, THIS WAS ALSO ACCEPTED BY THE IT AT, FURTHER ASSESSEE HAS ACCOUNTED FOR THE INTEREST FROM TWO OF THE COMP ANIES WHICH WAS ACCOUNTED FOR IN AYS. 2006-07 & 2008-09. IT WAS FU RTHER SUBMITTED THAT NO AMOUNT OF BORROWED FUND WAS DIVERTED AND THERE W AS A FINDING BY THE ITAT THAT ASSESSEE HAS ITS OWN FUNDS TO ADVANCE. I T WAS FURTHER SUBMITTED THAT SISTER-CONCERNS WERE IN THE SIMILAR LINE OF BUSINESS AND ASSESSEE WAS SOURCING RAW-MATERIAL FROM THEM AFTER THE UNITS HAVE BECOME OPERATIONAL AND THEREFORE, THE ADVANCES WERE TO BE CONSIDERED AS FOR THE PURPOSE OF BUSINESS AND RELIED ON THE HONB LE SUPREME COURT DECISION IN THE CASE OF S.A. BUILDERS LTD. VS. CIT [288 ITR 1] (SC) IN REPLY, DR RELIED ON THE ORDERS OF ITAT IN THESE YEA RS AND SUBMITTED THAT ASSESSEE FAILED TO PROVE THE COMMERCIAL EXPEDIENCY AND NEXUS OF THE AMOUNTS BORROWED AND UTILIZATION AND RELIED ON THE SAME DECISION TO SUBMIT THAT THERE IS NO COMMERCIAL EXPEDIENCY. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE ORDERS OF ITAT IN EARLIER YEARS AND LATER YEARS AND ALSO I N THIS YEAR IN THE FIRST ROUND OF APPEALS. AS CAN BE SEEN FROM THE SEQUENCE OF EVENTS, ITAT WAS HOLDING THAT THE FUNDS WERE ADVANCED FOR THE PURPOS E OF BUSINESS VIDE ITS ORDER IN AYS. 1999-2000 & 2000-03 DT. 09-01-200 9. IN THE IMMEDIATELY PRECEDING YEAR OF AY. 2004-05, ITAT IN ITA NO. 36 & 60/HYD/2009 ALSO HELD THAT ASSESSEE WAS ENTITLED TO DEDUCTION OF INTEREST AS CLAIMED BY IT. WHILE ANALYZING THE ISS UE, IT RELIED ON THE DECISION OF ITAT IN EARLIER YEARS AND ALSO THE PRIN CIPLES LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CIT [288 ITR 1] (SC) (SUPRA). THUS, ON ALL THE ADVANCES MADE UP TO AY. 2004-05, THE I.T.A. NOS. 258 & 259/HYD/2015 NATCO PHARMA LTD., :- 6 -: ISSUE IS IN FAVOUR OF ASSESSEE. AS SEEN FROM THE A MOUNTS ADVANCED TO SISTER-CONCERNS, AN AMOUNT OF RS. 18,72,63,000/- WA S ADVANCES GIVEN UP TO 31-03-2004. THEREFORE, TO THAT EXTENT, IT WA S ALREADY ESTABLISHED THAT THE FUNDS ADVANCED WERE FOR THE PURPOSE OF BUS INESS. THAT LEAVES US WITH FURTHER ADVANCE OF RS. 4,33,06,947/- WHICH WAS ADVANCED DURING THE YEAR 2004-05 I.E., RELEVANT FOR AY. 2005 -06. AS ON 31-03- 2006 IN FACT, THERE WAS DECREASE IN ADVANCES GIVEN BY ALMOST TO THE TUNE OF RS. 12.60 CRORES FROM THE OUTSTANDING AMOUNT OF RS. 23.05 CRORES AS ON 31-03-2005. ADVANCE WAS ONLY RS. 10,45,38,154/- AS ON 31-03-2006. THIS FACTUAL INFORMATION INDICATES THAT OUT OF RS. 18.72 CRORES ADVANCED UP TO 31-03-2004 THAT WAS ALREADY ESTABLISHED TO BE FOR THE PURPOSE OF BUSINESS. AS FAR AS AY 2006-07 IS CONCERNED THE OU TSTANDING ADVANCE BEING LESS THAT ADVANCE OF RS 18.72 CRORES IT CAN N OT BE STATED THAT ASSESSEE ADVANCED FUNDS FOR NON BUSINESS PURPOSES. THERE WAS REPAYMENT OF ADVANCES, SO AO ERRED IN COMING TO A C ONCLUSION AND DISALLOWING THE AMOUNT. AO CONSIDERED THAT ENTIRE AMOUNT WAS FOR NON- BUSINESS PURPOSES. WE ARE UNABLE TO UNDERSTAND HOW AN AMOUNT WHICH WAS ALREADY ADVANCED IN EARLIER YEARS RIGHT FROM AY . 1999-2000 ONWARDS AND HELD TO BE FROM OWN FUNDS AND FOR BUSINESS PURP OSES CAN BE CONSIDERED AS ADVANCED OUT OF BORROWALS SO AS TO DI SALLOW INTEREST CLAIM. THERE IS NO LOGIC IN DISALLOWING THE AMOUNT BY THE AO AND CONFIRMATION BY THE CIT(A). 10. AS FAR AS FURTHER ADVANCE OF RS. 4.33 CRORE S DURING THE YEAR IS CONCERNED, IT IS TO BE SEEN THAT ASSESSEE HAS SUFFI CIENT FUNDS OF ITS OWN TO ADVANCE TO ITS SISTER-CONCERNS. IN FACT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD., [313 ITR 340] (BOM ) HAS HELD THAT WHEREVER THERE IS MIXED FUNDS AND THE BORROWALS ADVANCED TO SISTER-CONCERNS ARE LESS THAN IT OWN FUNDS, IT I S TO BE CONSIDERED THAT THE ADVANCES GIVEN ARE OUT OF OWN FUNDS. FOLLOWING THE PRINCIPLES ON THE ISSUE, IT CANNOT BE CONSIDERED THAT THE AMOUNTS ADV ANCED DURING THE YEAR WERE OUT OF THE BORROWED FUNDS. I.T.A. NOS. 258 & 259/HYD/2015 NATCO PHARMA LTD., :- 7 -: 11. IT IS ALSO ON RECORD THAT ASSESSEES BORROWALS ARE FOR THE PURPOSE OF SPECIFIC OBJECTS AND THE BANKS WHICH ARE ADVANCING FUNDS DO NOT ALLOW TO THEM BE DIVERTED. AS CAN BE SEEN FROM THE RECORD, ASSESSEE HAS ITS OWN PROFITS/ CASH FLOW MORE THAN AMOUNTS ADVANCED, LEAV E ALONE THE SHARE CAPITAL AND RESERVES UPTO END EARLIER YEAR. IN VIE W OF THIS, IT CANNOT BE STATED THAT ASSESSEE HAS ADVANCED THE BORROWED FUND S. AO ALSO NEVER BOTHERED TO EXAMINE WHETHER ANY OF THE LOANS OBTAIN ED DURING THE YEAR WERE DIVERTED FOR NON-BUSINESS PURPOSES? HE ONLY D ISALLOWED ON PRESUMPTIONS WITHOUT EXAMINING THE FACTS AND ESTABL ISHING ANY NEXUS OF ADVANCED FUNDS WITH BORROWED FUNDS. IT CAN BE UNDE RSTOOD THAT AO HAS MECHANICALLY INVOKED THE PROVISIONS SO AS TO DISALL OW THE AMOUNT, WHEN IN FACT IN AY. 2006-07, THE ADVANCES GIVEN TO SISTE R-CONCERNS HAVE COME DOWN TO THE TUNE FROM RS. 23.05 CRORES TO RS. 10.45 CRORES. AS ALREADY STATED, FUNDS TO THE EXTENT OF RS. 18.79UPTO 31-03- 200 WERE ALREADY HELD TO BE FOR COMMERCIAL EXPEDIENCY. THEREFORE, LOGICA LLY SPEAKING, THERE CANNOT BE ANY DISALLOWANCE IN AY. 2006-07. 12. APART FROM THE ABOVE, IT IS ALSO ON RECORD THAT IN ORDER TO REDUCE THE LITIGATION, ASSESSEE HAS CHARGED INTEREST ON NA TCO ORGANICS LTD., IN AY. 2008-09 AND ACCOUNTED FOR AN AMOUNT OF RS. 5,96 ,29,676/-, BY WAY OF BOARD RESOLUTION IN THAT YEAR. SINCE BOARD RESO LUTION WAS PASSED SUBSEQUENTLY AND AT THE TIME OF ADVANCE NO INTEREST WAS PROVIDED, THE AMOUNT CANNOT BE CONSIDERED AS ACCRUED INTEREST AND THIS PRINCIPLE WAS ALSO ACCEPTED BY THE ITAT IN ASSESSEES OWN CASE IN AY. 2007-08, WHEN SUCH AMOUNT WAS BROUGHT TO TAX ON NOTIONAL ACCRUAL BASIS IN THAT YEAR. AS FAR AS ADVANCES TO KRISHNAPATNAM PORT CO. LTD., IS CONCERNED, ASSESSEE CHARGED AN AMOUNT OF RS. 60,82,000/- AS IN TEREST AND WAS ACCOUNTED WHICH WAS NOT EVEN REDUCED BY THE AO IN A Y. 2006-07, WHILE NOTIONAL ACCRUED INTEREST WAS TAXED IN EARLIER YEAR . KEEPING THESE FACTORS IN MIND AND CONSISTENT WITH ORDERS OF ITAT IN EARLIER YEARS AND LATER YEAR, WE ARE OF THE OPINION THAT THE AMOUNTS CANNOT BE DISALLOWED IN THIS YEAR, WHEN ASSESSEE HAS OFFERED AMOUNTS IN A LATER YEAR I.T.A. NOS. 258 & 259/HYD/2015 NATCO PHARMA LTD., :- 8 -: CONSIDERING ALL THE YEARS FOR CALCULATION OF INTERE ST. THE FACT THAT ASSESSEE HAS BUSINESS INTEREST IN VARIOUS CONCERNS WHICH HELPS IN ITS OWN BUSINESS BY WAY OF SUPPLY OF RAW-MATERIAL FOR C RITICAL PRODUCTS AND ALSO FOR TRANSPORTATION OF GOODS FOR EXPORT, WE ARE OF THE OPINION THAT THE ADVANCES ARE FOR THE PURPOSE OF BUSINESS AND COMMER CIAL EXPEDIENCY IS ESTABLISHED. FOR THESE REASONS, WE UPHOLD ASSESSEE S CONTENTIONS AND REVERSE THE ORDERS OF THE AO AND CIT(A) ON THIS ISS UE. AO IS DIRECTED TO DELETE THE DISALLOWANCE OF INTEREST, CLAIMED ON OTH ER BORROWALS, SO MADE IN THESE TWO ASSESSMENT YEARS. 13. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2015 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 23 RD SEPTEMBER, 2015 TNMM COPY TO : 1. NATCO PHARMA LTD., NATCO HOUSE, RD NO. 2, BANJA RA HILLS, HYDERABAD. C/O. K. VASANTKUMAR & A.V. RAGHU RAM, ADVOCATES, 610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2. THE D.C.I.T., CIRCLE-16(1), AAYAKAR BHAVAN, HYD ERABAD. 3. CIT (APPEALS)-4, HYDERABAD. 4. CIT-IV, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.