THE SWASTIK SAFE DEPOSITS & INVT, LTD, MUMBAI V. ACIT 7(2), MUMBAI

ITA 3545/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2817 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-06-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Business expenditure; Commercial expediency
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.3545/M/2012 ASSESSMENT YEAR: 1998-99 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD., 8 TH FLOOR, PIRAMAL TOWER, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI 400 013 PAN: AAACT 3608G VS. ACIT 7(2), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RONAK G. DOSHI, A.R. REVENUE BY : SHRI NEIL PHILIP, D.R. DATE OF HEARING : 28.10.2015 DATE OF PRONOUNCEMENT : 28.10.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 21.12.2011 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 1998-99. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) 13, MUMBAI [THE CIT(A)] ERRED IN UPHOLDING THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME TAX 7(2), MU MBAI [THE AO] IN DISALLOWING PREMIUM ON REDEMPTION OF DEBENTURES AMO UNTING TO RS.1,20,96,000/- ON THE ALLEGED GROUND THAT THE APP ELLANT HAD FAILED TO PROVE ANY COMMERCIAL EXPEDIENCY. ITA NO.3545/M/2012 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD. 2 2. HE FURTHER ERRED IN NOT FOLLOWING THE DIRECTION GIVEN BY THE HONBLE TRIBUNAL IN THE APPELLANTS OWN CASE IN A.Y. 2001-2002 (ITA NO.9424/M/04 DATED 19- 12-2007). 3. THE APPELLANT PRAYS THAT THE SAID DISALLOWANCE O F PREMIUM ON REDEMPTION OF DEBENTURES BE DELETED. 3. THIS IS THE SECOND ROUND OF APPEAL BEFORE US. T HE ISSUE RAISED IN THIS APPEAL IS RELATING TO THE DISALLOWANCE OF PREMIUM P AID ON REDEMPTION OF DEBENTURES AMOUNTING TO RS.1,20,96,000/- ON THE GRO UND THAT THE MONEY BORROWED BY ISSUE OF DEBENTURES WAS UTILIZED FOR GI VING INTEREST FREE LOANS. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT THE MO NEY WAS GIVEN TO SISTER CONCERNS FOR BUSINESS PURPOSES. WHEREAS THE CONTEN TION OF THE LOWER AUTHORITIES HAVE BEEN THAT THE DEBENTURES AMOUNT WA S IN FACT RECEIVED BY ONE M/S. ANAND PIRAMAL INVESTMENTS PVT. LTD. WHICH WAS FURTHER TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE BY WAY OF JOURNAL ENTRY AND THAT THE ASSESSEE COULD NOT ESTABLISH THE JUSTIFICATION OF GIVING INTEREST FREE LOAN TO THE SISTER CONCERNS OUT OF THE BORROWED FUNDS. THE MATTER TRAVELLED BY WAY OF APPEAL TO THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 27.06.08 RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O) WITH THE FOLLOWING OBSERVATIONS: 5. LEARNED REPRESENTATIVE FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 IN ITA NO.9424/MUM/2004, DATED 19.12.2007. ASSESSEES REPRESENTATIVE SUBMITTED, EXACTLY IDENTICAL ISSUE WAS REMANDED BACK TO THE FI LE OF AO BY THE TRIBUNAL VIDE PARA 12 OF ITS ORDER, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SA BUILDERS, REPORTED IN 288 ITR 1 (SC). 6. SINCE IDENTICAL ISSUE HAS BEEN DECIDED BY THE T RIBUNAL IN ASSESSEES OWN CASE FOR THE YEAR UNDER CONSIDERATION ALSO WE DIREC T THE AO TO DECIDE THE ISSUE AFRESH AS PER THE DIRECTION OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02, CONTAINED IN PARA 12 OF THE ORDER (CITED SUPRA). T HE APPEAL BY THE ASSESSEE ON THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 4. A PERUSAL OF ABOVE PARA REVEALS THAT THE TRIBUNA L HAD DIRECTED THE AO TO DECIDE THE ISSUE AS PER THE DIRECTIONS GIVEN IN THE OWN CASE OF THE ASSESSEE FOR ITA NO.3545/M/2012 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD. 3 A.Y. 2001-02 AS CONTAINED IN PARA 12 OF THE SAID OR DER. WE THINK IT PROPER TO REPRODUCE THE PARA 12 OF THE TRIBUNAL FOR A.Y. 2001 -02 PASSED IN THE OWN CASE OF THE ASSESSEE IN ITA NO.9424/M/2004 DATED 29.12.0 7. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIALS ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW AND THE JUDGMENT OF HONBLE APEX COURT RELIED UPON BY THE L EARNED AR OF THE ASSESSEE. WE FIND THAT AS PER THIS JUDGMENT OF HONBLE APEX COUR T, NO DISALLOWANCE IS CALLED FOR ON ACCOUNT OF ADVANCING LOANS TO SISTER CONCERNS AT NIL/NORMAL RATE OF INTEREST IF IT IS FOUND THAT THESE SISTER CONCERNS HAS NOT USED THESE AMOUNTS FOR PERSONAL PURPOSES. IN VIEW OF THIS, THE DISALLOWANCE OF INT EREST ON THIS ACCOUNT IS TO BE DELETED IF IT IS FOUND THAT THESE SISTER CONCERNS H AS NOT USED THESE AMOUNTS FOR PERSONAL PURPOSES. SINCE, THIS FACT IS NOT ON RECO RD, WE FEEL THAT FOR THIS LIMITED PURPOSE OF VERIFYING THIS FACT THAT WHETHER THESE S ISTER CONCERNS HAVE USED THESE FUNDS FOR PURPOSES OR NOT, THE MATTER SHOULD GO BAC K TO THE FILE OF THE ASSESSING OFFICER. WE, THEREFORE, SET ASIDE THE ORDER OF LEA RNED CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OF FICER WITH THE DIRECTION THAT HE SHOULD DECIDE THIS ISSUE IN THE LIGHT OF THIS JUDGM ENT OF HONBLE APEX COURT RENDERED IN THE CASE OF S.A. BUILDERS (SUPRA) AFTER VERIFYIN G THE FACTS AS TO WHETHER THESE RELATED PARTIES HAVE USED THESE FUNDS ADVANCED BY T HE ASSESSEE FOR PERSONAL PURPOSES. IF IT IS FOUND THAT THE FUNDS WERE NOT U SED BY THESE PARTIES FOR PERSONAL PURPOSES, THAN NO DISALLOWANCE CAN BE MADE. BUT IF IT IS FOUND THAT ONE OR MORE PARTIES HAVE USED FOR PERSONAL PURPOSES ANY PART OF THE FUNDS SO ADVANCED BY THE ASSESSEE, THAN DISALLOWANCE SHOULD BE MADE TO THE E XTENT OF DIFFERENCE IN INTEREST ON THAT AMOUNT OF LOAN ONLY. THIS GROUND STANDS AL LOWED FOR STATISTICAL PURPOSES. 5. IN THE SET ASIDE PROCEEDINGS, THE AO AGAIN OBSER VED THAT THE ASSESSEE DID NOT HAVE SUFFICIENT INTEREST FREE FUNDS TO ADVANCE THE MONEY WITHOUT CHARGING ANY INTEREST AND THAT THE BORROWED FUNDS WERE GIVEN AS INTEREST FREE LOANS TO THE RELATED PARTIES DURING THE YEAR WHICH WERE NOT USED FOR BUSINESS PURPOSES BUT FOR INVESTMENTS BY THE SAID RELATED PARTIES. HE, T HEREFORE, OBSERVED THE VERY PURPOSE OF ADVANCING THE FUNDS HAD NOT BEEN SERVED. HE OBSERVED THAT THE SAID RELATED COMPANIES TO WHOM THE ASSESSEE HAD ADVANCED LOAN WERE NOT IN THE INVESTMENT BUSINESS, HENCE THE INTEREST ON THE LOAN S RAISED FOR INVESTMENT IN SHARES WAS NOT ALLOWABLE AS A BUSINESS EXPENDITURE IN THE HANDS OF THOSE COMPANIES. HE, THEREFORE, HELD THAT THE RATIONAL B EHIND THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF S.A. BUILDERS VS. CIT (2007) 288 ITR 1 (SC) WAS TO ALLOW THE INTEREST EXPENDITURE ON BORROWED F UNDS ADVANCED TO SISTER ITA NO.3545/M/2012 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD. 4 CONCERN AND USED FOR BUSINESS PURPOSES BY THE RELAT ED CONCERN WAS THAT OTHERWISE THE INTEREST WOULD HAVE BEEN ALLOWED AS E XPENDITURE IN THE HANDS OF THE RELATED CONCERN IF THE SAID RELATED CONCERN WOU LD HAVE PAID THE INTEREST TO THE ASSESSEE. HE OBSERVED THAT IN THIS CASE, THE I NTEREST EXPENDITURE WAS NOT ALLOWABLE AS BUSINESS EXPENDITURE TO THE RELATED CO NCERN, HENCE THE CORRESPONDING INTEREST PAID BY THE ASSESSEE ON THE AMOUNT ADVANCED OUT OF BORROWED FUNDS TO THE SISTER CONCERN WAS DISALLOWAB LE IN THE HANDS OF THE ASSESSEE. 6. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE EX PLAINED THAT THE LOANS WERE ADVANCED TO ARTIMIS INVESTMENTS PVT. LTD., BAC CHUS INVESTMENTS PVT. LTD., MELODY INVESTMENTS, PVT. LTD. AND SWIFT INVES TMENTS PVT. LTD. THE ASSESSEE PRODUCED THE MEMORANDUM OF ASSOCIATION OF THE ABOVE COMPANIES TO SHOW THAT THE MAIN BUSINESS OF THESE COMPANIES WAS MAKING INVESTMENTS IN OTHER COMPANIES AND THAT THE LOAN GIVEN BY THE ASSE SSEE WAS UTILIZED BY THE SAID COMPANIES FOR THEIR BUSINESS PURPOSE ONLY. TH E LD. CIT(A), HOWEVER, HELD THAT THE ASSESSEE COULD NOT ESTABLISH HIS OWN BUSINESS EXPEDIENCY TO ADVANCE INTEREST FREE LOAN TO THE SISTER CONCERNS. HE OBSERVED THAT THE SAID LOAN WAS NOT ADVANCED BY THE ASSESSEE FOR THE BUSINESS P URPOSES OF THE ASSESSEE, HENCE THE SAME WAS RIGHTLY DISALLOWED BY THE AO. A GGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS COME IN APPEAL BEF ORE US. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES. WE FIND THAT THE TRIBUNAL, VIDE PARA 12 OF THE ORDER DATED 19.12.07 FOR A.Y. 2001-02, HAS RESTORED THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION THAT HE SHOULD DECIDE THIS ISSUE IN THE LIGHT OF THE JUDGMENT OF T HE HONBLE APEX COURT RENDERED IN THE CASE OF S.A. BUILDERS VS. CIT (SUPRA) AND AFTER VERIFYING THE FACTS AS TO WHETHER THESE RELATED PARTIES HAVE USED THE FUNDS ADVANCED BY THE ASSESSEE FOR PERSONAL PURPOSES OR FOR BUSINESS PURP OSES. IF IT IS FOUND THAT THE ITA NO.3545/M/2012 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD. 5 FUNDS WERE NOT USED BY THESE PARTIES FOR PERSONAL P URPOSES, THEN NO DISALLOWANCE SHOULD BE MADE. HOWEVER, IF ANY FUND WAS FOUND TO BE UTILIZED FOR PERSONAL PURPOSES, THEN THE DISALLOWANCE OF INT EREST TO THAT EXTENT BE MADE. THE TRIBUNAL, FOLLOWING THE SAID ORDER IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 1998-99, HAS DIRECTED THE AO TO DECIDE THE ISSUE FOR THE YEAR UNDER CONSIDERATION AS PER DIRECTION O F THE TRIBUNAL FOR A.Y. 2001- 02. SO, THE TRIBUNAL HAS DIRECTED THE AO TO DECIDE THE ISSUE AS PER THE GUIDELINES LAID DOWN BY THE HONBLE SUPREME COURT I N THE CASE OF S.A. BUILDERS VS. CIT (SUPRA) AND FURTHER TO FIND OUT WHETHER TH E FUND WAS USED BY THE SISTER CONCERNS FOR BUSINESS PURPOSE OR NOT. W E FIND THAT SINCE THE SISTER CONCERNS WERE IN THE BUSINESS OF INVESTMENT IN OTHE R COMPANIES, HENCE THE ASSESSEE HAS PROVED THAT THE LOAN WAS USED BY THE S ISTER CONCERNS FOR THEIR BUSINESS PURPOSES. HOWEVER, A PERUSAL OF THE DECIS ION OF THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS VS. CIT (SUPRA) REVEALS THAT THE HONBLE SUPREME COURT HAS CATEGORICALLY HELD THAT WHAT IS T O BE SEEN AS TO WHETHER THE ASSESSEE HAS ADVANCED LOAN TO ITS SISTER CONCERN OR TO A SUBSIDIARY AS A MEASURE OF COMMERCIAL EXPEDIENCY? THE HONBLE SUPREME COUR T, WHILE REFERRING TO SECTION 37 OF THE ACT, HAS HELD THAT THE EXPRESSION FOR THE PURPOSE OF BUSINESS INCLUDES EXPENDITURE VOLUNTARILY INCURRED FOR COMME RCIAL EXPEDIENCY AND IT IS IMMATERIAL IF A THIRD PARTY ALSO GETS BENEFITTED TH EREBY. THE HONBLE SUPREME COURT FURTHER EXPLAINED THE EXPRESSION COMMERCIAL EXPEDIENCY AS UNDER: THE EXPRESSION 'COMMERCIAL EXPEDIENCY' IS AN EXPRE SSION OF WIDE IMPORT AND INCLUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN INCURS FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE MAY NOT HAVE BEEN INCURRE D UNDER ANY LEGAL OBLIGATION, BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE I F IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY. 8. THE HONBLE SUPREME COURT THEREAFTER CONSIDERING THE VARIOUS ASPECTS OF THE MATTER HAS CONCLUDED AS UNDER: ITA NO.3545/M/2012 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD. 6 WE AGREE WITH THE VIEW TAKEN BY THE DELHI HIGH COU RT IN CIT VS. DALMIA CEMENT (BHART) LTD . (2002) 254 ITR 377 THAT ONCE IT IS ESTABLISHED TH AT THERE WAS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSI NESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF) , THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM-CHAIR OF THE BUSINES SMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECIDE HO W MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMSTANCES OF T HE CASE. NO BUSINESSMAN CAN BE COMPELLED TO MAXIMIZE ITS PROFIT. THE INCOME TAX AUTHORITIES MUST PUT THEMSELVES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOOK AT THE MATTER FR OM THEIR OWN VIEW POINT BUT THAT OF A PRUDENT BUSINESSMAN. AS ALREADY STATED ABOVE, WE HAVE TO SEE THE TRANSFER OF THE BORROWED FUNDS TO A SISTER CONCERN FROM THE POI NT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIEW WHETHER T HE AMOUNT WAS ADVANCED FOR EARNING PROFITS. WE WISH TO MAKE IT CLEAR THAT IT IS NOT OUR OPINIO N THAT IN EVERY CASE INTEREST ON BORROWED LOAN HAS TO BE ALLOWED IF THE ASSESSEE ADV ANCES IT TO A SISTER CONCERN. IT ALL DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE R ESPECTIVE CASE. FOR INSTANCE, IF THE DIRECTORS OF THE SISTER CONCERN UTILIZE THE AMO UNT ADVANCED TO IT BY THE ASSESSEE FOR THEIR PERSONAL BENEFIT, OBVIOUSLY IT CANNOT BE SAID THAT SUCH MONEY WAS ADVANCED AS A MEASURE OF COMMERCIAL EXPEDIENCY. HOW EVER, MONEY CAN BE SAID TO BE ADVANCED TO A SISTER CONCERN FOR COMMERCIAL EXPE DIENCY IN MANY OTHER CIRCUMSTANCES (WHICH NEED NOT BE ENUMERATED HERE). HOWEVER, WHERE IT IS OBVIOUS THAT A HOLDING COMPANY HAS A DEEP INTEREST IN ITS S UBSIDIARY, AND HENCE IF THE HOLDING COMPANY ADVANCES BORROWED MONEY TO A SUBSID IARY AND THE SAME IS USED BY THE SUBSIDIARY FOR SOME BUSINESS PURPOSES, THE A SSESSEE WOULD, IN OUR OPINION, ORDINARILY BE ENTITLED TO DEDUCTION OF INTEREST ON ITS BORROWED LOANS. 9. A PERUSAL OF THE ABOVE CONCLUSION REVEALS THAT T HOUGH AS PER THE PROVISIONS OF SECTION 37, IT IS NOT NECESSARY THAT THE LOAN AMOUNT SHOULD BE EXCLUSIVELY USED IN THE BUSINESS OF THE ASSESSEE. HOWEVER, THE REQUIREMENT IS THAT IT SHOULD BE USED FOR THE PURPOSE OF THE BUSIN ESS WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF. WHAT IS TO BE SEEN IS THAT THE TRANSFER OF BORROWED FUNDS TO A SISTER CONCERN WAS OUT OF COMMERCIAL EXPEDIENCY. THE HONBLE SUPREME COURT THEREAFTER W ISHED TO MAKE IT CLEAR THAT THE ORDER OF THE HONBLE SUPREME COURT SHOULD NOT BE INTERPRETED AS THAT IN EVERY CASE INTEREST ON BORROWED LOAN HAS TO BE A LLOWED IF THE ASSESSEE ADVANCES IT TO A SISTER CONCERN. IT ALL DEPENDS UP ON THE FACTS AND CIRCUMSTANCES OF THE RESPECTIVE CASE. THE TWO CONDITIONS WHICH A RE TO BE FULFILLED ARE THAT THE ITA NO.3545/M/2012 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD. 7 LOAN SHOULD BE ADVANCED OUT OF COMMERCIAL EXPEDIENC Y AND SECONDLY THE SISTER CONCERN SHOULD USE THE LOAN FOR ITS BUSINESS PURPOS E AND NOT FOR THE PERSONAL PURPOSE OF ITS DIRECTORS OR PARTNERS ETC. THE HON BLE SUPREME COURT THEREAFTER HELD IN THE SAID CASE THAT SINCE THE SISTER CONCERN WAS A SUBSIDIARY OF THE ASSESSEE COMPANY AND THE ASSESSEE COMPANY BEING THE HOLDING COMPANY HAD A DEEP INTEREST IN ITS SUBSIDIARY, HENCE THE LOAN ADV ANCED TO SUBSIDIARY WAS OUT OF COMMERCIAL EXPEDIENCY. 10. NOW COMING TO THE FACTS OF THE CASE IN HAND. T HE LOWER AUTHORITIES NEITHER IN THE FIRST ROUND NOR IN THE SECOND ROUND HAVE EXAMINED THE FIRST LIMB OF THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE S.A. BUILDERS VS. CIT (SUPRA) CASE AS TO WHETHER THE LOAN ADVANC ED TO SISTER CONCERN BY THE ASSESSEE WAS OUT OF THE COMMERCIAL E XPEDIENCY OR NOT. THOUGH, IN THE SET ASIDE PROCEEDINGS, THE ASSESSEE HAS DEMONSTRATED THAT THE LOAN WAS USED BY THE SISTER CONCERN FOR ITS BUSINES S PURPOSE, HOWEVER NO DOCUMENT OR EXPLANATION HAS BEEN SUBMITTED TO SHOW THAT THE LOAN ADVANCED BY THE ASSESSEE TO ITS SISTER CONCERN WAS OUT OF COMME RCIAL EXPEDIENCY. THIS ISSUE REQUIRES EXAMINATION AT THE HANDS OF THE AO. WE FE EL PAINED BUT ARE FORCED TO RESTORE THE MATTER AGAIN BACK TO THE FILE OF THE AO TO RECORD A FINDING AS TO WHETHER THE LOAN ADVANCED BY THE ASSESSEE TO ITS SI STER CONCERNS WAS OUT OF COMMERCIAL EXPEDIENCY OR NOT. IF IT IS FOUND THAT THE LOAN ADVANCED BY THE ASSESSEE TO ITS SISTER CONCERNS WAS OUT OF BUSINESS REQUIREMENT OR COMMERCIAL EXPEDIENCY, THOUGH IT MAY NOT BE FOR THE PURPOSE OF EARNING OF PROFIT, THEN AS PER THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS VS. CIT (SUPRA), THE INTEREST EXPENDITURE WILL BE AN ALLOWABLE EXPENDITURE UNDER SECTION 37 OF THE ACT. THE MATTER IS RESTORED TO THE FILE OF THE AO TO LOOK INTO THIS LIMITED ASPECT ONLY. NEEDLESS TO SAY THAT THE AO WILL GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS C ASE. ITA NO.3545/M/2012 M/S. THE SWATIK SAFE DEPOSITS & INVT. LTD. 8 11. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2015. SD/- SD/- (R.C. SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.10.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.