OZONE FINANCE AND INVESTMENTS P.LTD, MUMBAI V. ITO 8(2)4, MUMBAI

ITA 5886/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3690 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Commercial expediency

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENC H, MUMBAI . . , . , ! ' BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO, AM ./I.T.A. NO.5886/M/2011 ( # $ %$ / ASSESSMENT YEAR :2006-2007) M/S. OZONE FINANCE AND INVESTMENTS PVT. LTD., LOK BHAVAN, LOK BHARATI COMPLEX, MAROL MAROSHI ROAD, ANDHERI (E), MUMBAI 400 059. # / VS. ITO - 8(2)(4), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. & ! ./PAN : AAACO 0661 L ( &' /APPELLANT) .. ( ()&' / RESPONDENT) &' * + / APPELLANT BY : SHRI DEEPAK TRALSHAWALA ()&' * + / RESPONDENT BY : SHRI RAJARSHI DWIVEDY, DR # * ,! /DATE OF HEARING : 18.4.2013 -.% * ,! /DATE OF PRONOUNCEMENT : 08/05/2013 / / / / / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 23.8.2011 IS A GAINST THE ORDER OF CIT (A)- 17, MUMBAI DATED 8.6.2011 FOR THE ASSESSMENT YEAR 2 006-2007. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE MADE U/S 36(1)(III) BEI NG INTEREST PAID AMOUNTING TO RS. 4,01,096/- WITHOUT APPRECIATING THE SUBMISSION DATE D 8.9.2008 MADE BY THE APPELLANT BEFORE THE LEARNED AO AND THOSE MADE BEFORE HIM. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE OF INTEREST ON THE GROUN D THAT NO BUSINESS WAS CARRIED ON OR THAT THERE WAS NO BUSINESS CARRIED OUT DURING TH E YEAR IGNORING THE FACT THAT THE APPELLANTS BUSINESS ITSELF IS THAT OF FINANCE AND I NVESTMENT WHICH FACT IS NOT DISPUTED IN THE ASSESSMENT ORDER. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT (A) ERRED IN UPHOLDING THE AOS ACTION IN NOT COMPUTING THE INCOME UNDER THE HEAD BUSINESS BUT ONLY UNDER THE HEAD OTHER SOURCE IGNOR ING THE FACTS OF THE CASE ON RECORD. 2 3. REFERRING TO THE ABOVE MENTIONED GROUNDS, SHRI D EEPAK TRALSHAWALA, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE MAJOR I SSUE FOR ADJUDICATION BEFORE THE TRIBUNAL RELATES TO THE ALLOWABILITY OF INTEREST OF RS. 4,01,096/- PAID BY THE ASSESSEE U/S 36(1)(III) OF THE ACT. REFERRING TO GROUND NO.3, LD COUNSEL MENTIONED THAT THE SAID GROUND EMANATING FROM THE IMPUGNED OR DER, THEREFORE, GROUND NO.3 IS DISMISSED. HENCE, THE ONLY ISSUE THAT IS LEFT FOR ADJUDICATION RELATES TO THE ALLOWABILITY OF INTEREST PAID U/S 36(1)(III) OF THE ACT. 4. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE IMPUGNED AMOUNT OF INTEREST, DEBITED TO THE PROFIT & LOSS ACCOUNT, REF ERS TO THE INTEREST PAID TO SNEH SHARES AND BROKERS P. LTD. FROM WHOM A LOAN OF RS. 40.00 LACS WAS RECEIVED BY THE ASSESSEE AGAINST PLEDGE OF SHARES. THE MAIN BUSINE SS OF THE ASSESSEE IS THAT OF FINANCE AND INVESTMENT AS CAN BE SEEN FROM MEMORANDU M AND ARTICLES OF ASSOCIATION. THEREFORE, THE ABOVE BORROWING WAS FO R THE PURPOSE OF BUSINESS. OUT OF THE SAID LOAN, A MAJOR PORTION IE RS. 39,10,000/ - WAS ADVANCED TO ASSESSEES SISTER CONCERN, M/S. LOK ENTERPRISES, M/S. LOK ENTE RPRISES IN TURN GAVE A TEMPORARY ADVANCE OF RS. 31.00 LACS TO M/S. LOK HOUSING AND C ONSTRUCTIONS LTD AND ANOTHER RS. 8,90,000/- TO M/S. AZOFEN PVT. LTD, BOTH OF WHO M ARE BELONGING TO LOK GROUP OF CASES IE THE SISTER CONCERNS. WHEREAS M/S. LOK HOU SING AND CONSTRUCTIONS LTD UTILIZED THE SAID FUNDS IN REPAYING ITS OUTSTANDING LOAN TO TIMES BANK LTD, M/S. AZOFEN PVT. LTD UTILIZED THE LOAN FOR PAYING TO ITS CREDITORS, BEING SUPPLIERS ETC. IN OTHER WORDS, THE LOAN ULTIMATELY HAS BEEN USED BY T HE ASSESSEES SISTER CONCERNS FOR THE PURPOSE OF BUSINESS. THEREFORE, AS PER THE ASS ESSEE, THE LOAN TAKEN BY THE ASSESSEE WAS FOR THE PURPOSE OF BUSINESSES AND THE INTEREST PAID BY THE ASSESSEE TO THE ABOVE SAID PARTY IS RIGHTLY ALLOWABLE U/S 36(1) (III). 4.1. THUS, ASSESSEE BORROWED LOAN OF RS. 40 LACS FR OM SNEH SHARES AND BROKERS P. LTD AND PAID THE SAID IMPUGNED INTEREST OF RS. 4,01 ,096/-. HOWEVER, THE SAID LOAN WAS ADVANCED TO M/S. LOK ENTERPRISES TO THE EXTENT OF RS. 39.1 LACS AND TO M/S. AZOFEN PVT. LTD TO THE EXTENT OF RS. 8.9 LACS AND D ID NOT CHARGE ANY INTEREST FROM THEM. THUS, THE SAID TWO ENTITIES ARE THE SISTER C ONCERNS OF THE ASSESSEE AND THE ADVANCES RECEIVED FROM THE ASSESSEE WERE UTILIZED F INALLY FOR CLEARING OF THE LOANS 3 WITH TIMES BANK LTD. AND OTHER CREDITORS. IN FACT, M/S. LOK ENTERPRISES IN TURN ADVANCED RS. 39.1 LACS TO M/S. LOK HOUSING AND CONS TRUCTIONS LTD. WHEN THE AO PROPOSED TO DISALLOW THE INTEREST PAID AS NON-BUSIN ESS EXPENDITURE OF THE ASSESSEE, ASSESSEE SUBMITTED THAT THE LOAN OF RS. 40 LACS ULT IMATELY USED BY ITS SISTER CONCERNS FOR THE PURPOSES OF THEIR BUSINESSES AND THEREFORE, THE INTEREST PAID BY THE ASSESSEE HAS RIGHTLY ALLOWABLE U/S 36(1)(III) OF THE ACT. 4.2. AO DID NOT ACCEPT THE ABOVE SUBMISSIONS OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT IT IS A CASE OF DIVERSION OF INTERE ST BEARING FUNDS TO ITS SISTER CONCERNS ON INTEREST FREE BASIS AND THERE IS NO BUSINESS PUR POSES OF THE ASSESSEE INVOLVED IN THE PROCESS. THEREFORE, RELYING ON THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT, THE SAID AMOUNT OF RS. 4,01,096/- DEBITED TO THE PROFIT & LOSS ACCOUNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.3. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE RELIED ON VARIOUS DECISIONS WHICH ARE AS UNDER: 1. S.A. BUILDERS VS. CIT (A) (2007) 158 TAXMAN 74 ( SC) 2. MEENAKSHI SYNTHETICS (P) LTD. VS. ACIT (2003) 84 ITD 563 (LUCK. BENCH) 3. ARJUNLAL NEBHUMAL & CO. VS. DY. CIT (2003) 80 TT J (AHD.) 67 4. INDIAN METALS AND FERROW ALLOYS LTD. VS. CIT (19 92) 193 ITR 344 (ORISSA) 5.1. FURTHER, ASSESSEE REITERATED THE SUBMISSIONS M ADE BEFORE THE AO. THERE IS A REFERENCE TO THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF S.A BUILDERS VS. CIT (SUPRA) AND THE JUDGMENT OF HONBLE KARNATAKA H IGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS H.S. SHIVARUDRAPPA (K AR) 200 ITR 1. THE CIT (A) ANALYZED THE SAME AND ALSO THE COMPUTATION OF INCOM E FURNISHED BY THE ASSESSEE WITH THE RETURN OF INCOME AND CAME TO THE CONCLUSIO N THAT THE INCOME OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION IS OFFERED IN UNDER THE HEAD CAPITAL GAINS. THE OTHER MINOR RECEIPTS SUCH AS INTEREST INCOME OF FERED UNDER THE HEAD BUSINESS INCOME. ON THE DEBIT SIDE, ASSESSEE CLAIMED THE I NTEREST EXPENDITURE OF RS.4,01,096/- AGAINST THE SAID BUSINESS INCOME. AO DID NOT ALLOW THE SAID CLAIM OF THE ASSESSEE AND HELD THAT THE ASSESSEE IS NOT HAVI NG ANY BUSINESS INCOME AS THE 4 ASSESSEE IS SUBSTANTIALLY ENGAGED IN THE INVESTMENT ACTIVITY. CIT (A) DISTINGUISHED THE APEX COURT JUDGMENT IN THE CASE OF S.A. BUILDER S (SUPRA) AND HE IS CRITICAL OF THE ASSESSEES CONDUCT OF NON-FURNISHING AND ESTABLISHI NG THE BUSINESS PURPOSES AND COMMERCIAL EXPEDIENCY IN ADVANCING THE LOANS TO SIS TER CONCERNS. FINALLY, CIT (A) HELD THAT ASSESSEES CLAIM OF INTEREST U/S 36(1)(II I) IS NOT ALLOWABLE IN VIEW OF THE DISCUSSION GIVEN IN 4.6 OF THE IMPUGNED ORDER. AGG RIEVED WITH THE SAME, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. DURING THE PROCEEDINGS BEFORE US, SHRI DEEPAK TR ALSHAWALA, LD COUNSEL FOR THE ASSESSEE, BROUGHT OUR ATTENTION TO THE CONTENTS OF THE PAPER BOOKS AND HEAVILY RELIED ON THE JUDGMENT OF THE APEX COURT IN THE CAS E OF S.A. BUILDERS (SUPRA). FURTHER, LD COUNSEL BROUGHT OUR ATTENTION TO THE CO NTENTS OF THE SAID JUDGMENT IN PLACITUM 21, 26, 27, 31, 32 AND SUMMED UP BY ASKING THAT T HE ADVANCED GIVEN BY THE ASSESSEE OUT OF THE INTEREST BEARING LOANS TO T HE SISTER CONCERNS IS ALLOWABLE, WHEN THE SAME ARE GIVEN FOR THE REASONS OF COMMERCI AL EXPEDIENCY. THEY CAN BE DISALLOWED ONLY IF THE SAID ADVANCES ARE GIVEN FOR SENTIMENTAL OF PERSONAL REASONS. WITHOUT DISPUTING THE FACT THAT THE INTEREST BEARIN G LOANS ARE GIVEN TO M/S. LOK HOUSING AND CONSTRUCTIONS LTD AND M/S. AZOFEN PVT. LTD, WHO IN TURN USED THE SAID ADVANCED FOR CLEARING UP THEIR OUTSTANDING LOANS WI TH THE TIMES BANK LTD AND OTHER CREDITORS. LD COUNSEL MENTIONED THAT THE SAME CONS TITUTE COMMERCIAL EXPEDIENCY TO THE ASSESSEES BUSINESS. LD COUNSEL ALSO MENTIONED THAT THE SUM OF RS. 40 LACS LOAN WAS TAKEN BY THE ASSESSEE IN THE NORMAL COURSE OF T HE BUSINESS AND THE INTEREST WAS ACCORDINGLY CLAIMED AS BUSINESS EXPENSES. IN RESPONS E TO THE BENCHS QUERY FOR ESTABLISHING THE DETAILS OF SUCH COMMERCIAL EXPEDIE NCY, LD COUNSEL RELIED ON THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IN THIS REGARD, LD COUNSEL READ OUT THE ABOVE STATED CONTENTS OF THE APEX COURT JUDGMEN T AND HELD THAT THE CLAIM OF THE ASSESSEE SHOULD BE ALLOWED. 7. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. BRINGING OUR ATTENTION TO THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT, LD COUNSEL MENTIONED THAT THE AMOUNT OF INTEREST PAID IN RESPECT OF THE CAPIT AL BORROWED FOR THE PURPOSE OF THE BUSINESS OR PROFESSION IS ALONE ALLOWABLE UNDER THESE PROVISIONS. 5 THE AMOUNT OF RS. 40 LACS LOAN BORROWED BY THE ASSE SSEE IS NOT A CAPITAL UTILIZED BY THE ASSESSEE AND THERE IS NO EVIDENCE TO DEMONSTRAT E THAT THE SAME IS UTILIZED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. THE AM OUNT OF RS. 39.1 LACS GIVEN TO M/S. LOK ENTERPRISES WAS NOT UTILIZED BY M/S. LOK E NTERPRISES FOR ITS BUSINESS PURPOSES. IT IS FURTHER ADVANCED TO ANOTHER SISTER CONCERN NAMED M/S. LOK HOUSING AND CONSTRUCTIONS LTD FOR THE PURPOSE OF CLEARING T HE OUTSTANDING LOANS QUA TIMES BANK LTD. SIMILARLY, M/S. AZOFEN PVT. LTD ALSO TOO K THE ADVANCE OF RS. 8.9 LACS FROM THE ASSESSEE AND UTILIZED THE SAME FOR CLEARING ITS LOANS QUA ITS CREDITORS. AS PER THE LD DR, THE INTEREST OF RS. 4,01,096/- PAID BY T HE ASSESSEE IS IN RESPECT OF THE LOAN OF RS. 40 LACS FINALLY UTILIZED BY THE SISTER CONCERNS FOR CLEARING OF THE RESPECTIVE LOANS. WHY THE SAID LOANS WERE TAKEN BY THEM AND F OR WHAT PURPOSES, ARE NOT AVAILABLE ON RECORD AND ASSESSEE HAS NOT DEMONSTRAT ED WITH THE EVIDENCES. IN THE ABSENCE OF EVIDENCES, IT IS OPEN TO DOUBT THAT AT L EAST RS. 39.1 LACS MAY NOT HAVE BEEN UTILIZED FOR THE COMMERCIAL REASONS. THEREFOR E, THE APEX COURT JUDGMENT THAT THE LOANS GIVEN BY THE ASSESSEE TO THE SUBSIDIARIES FOR SENTIMENTAL OR PERSONAL REASONS ARE NOT ALLOWABLE WHICH MAY BE APPLICABLE T O THE INSTANT CASE. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDE RS OF THE REVENUE AUTHORITIES AND THE PAPER BOOK FILED BEFORE US AS W ELL AS THE CITATIONS RELIED UPON BY THE LD REPRESENTATIVES OF BOTH THE PARTIES. AS EVI DENT FROM THE MEMORANDUM AND ARTICLES OF ASSOCIATION, THE CORE ACTIVITY OF THE A SSESSEE IS INVESTMENT ACTIVITY AND THE SUBSIDIARY OBJECTS INCLUDE FINANCING TOO. THERE IS NO DISPUTE ON THE FACT THAT THE INTEREST BEARING LOAN OF RS. 40 LACS WAS TAKEN FOR THE BUSINESS PURPOSES OF THE ASSESSEE. HOWEVER, THE SAID LOAN WAS GIVEN AS INTER EST FREE ADVANCES TO THE SISTER CONCERNS M/S. LOK ENTERPRISES. M/S. LOK HOUSING AND CONSTRUCTION LTD. AND M/S. AZOFEN PVT. LTD. IT IS NOT THE CASE OF THE ASSESSE E THAT THE ASSESSEE GAVE THE SAID ADVANCES FOR A CONCESSIONAL RATE OF INTEREST. THERE FORE, IT IS NOT DIRECTLY A CASE OF APPLICATION OF LOAN FOR ASSESSEES OWN BUSINESS OPE RATIONS. SO, WE HAVE TO EXAMINE WHETHER THE ASSESSEE FALLS WITHIN THE EXTENDED MEAN ING OF THE BUSINESS PURPOSES OF THE ASSESSEE. THERE IS NO INFORMATION FORTHWITH COM ING FROM THE ASSESSEES SIDE TO THE END USE OF THE ADVANCES GIVEN BY THE ASSESSEE E XCEPT STATING THAT THEY WERE USED FOR CLEARING OF THE OUTSTANDING LOANS WITH TIM ES BANK LTD. NO INFORMATION IS 6 AVAILABLE ON RECORD TO KNOW AS TO HOW AND WHY M/S. LOK HOUSING AND CONSTRUCTIONS LTD HAS TAKEN LOAN FROM TIMES BANK LTD AND THE PURP OSES OF SUCH LOANS. WHEN THE ASSESSEE MAKES A CLAIM OF DEDUCTION U/S 36(1)(III), THE ONUS IS ON THE ASSESSEE TO DEMONSTRATE WITH EVIDENCES. THIS IS A CASE WHERE T HE EVIDENCES RELATING TO THE BUSINESS PURPOSES ARE NOT FORTHWITH COMING AS ALLEG ED BY THE LOWER AUTHORITIES. ON THIS COUNT, THE CLAIM OF THE ASSESSEE IS NOT ALLOWA BLE. FURTHER, WE EXAMINED THE CONTENTS OF THE APEX COURT JUDGMENT IN THE CASE OF S.A. BUILDERS LTD (SUPRA), RELIED UPON BY THE LD AR BY THE ASSESSEE. THE SAME READ AS UNDER: 21. IN MADHAV PRASAD JATIA V. CIT [1979] 118 ITR 2 00 (SC) ; AIR 1979 SC 1291, THIS COURT HELD THAT THE EXPRESSION FOR THE PURPOSE OF BUSINESS OCCURRING UNDER THE PROVISION IS WIDER IN SCOPE THA N THE EXPRESSION FOR THE PURPOSE OF EARNING INCOME, PROFITS OR GAINS, A ND THIS HAS BEEN THE CONSISTENT VIEW OF THIS COURT. 26. THE EXPRESSION COMMERCIAL EXPEDIENCY IS AN EX PRESSION OF WIDE IMPORT AND INCLUDES SUCH EXPENDITURE AS A PRUDENT B USINESSMAN INCURS FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE MAY NOT HA VE BEEN INCURRED UNDER ANY LEGAL OBLIGATION, BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE IF IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIE NCY. 27. NO DOUBT, AS HELD IN MADHAV PRASAD JATIA V. CIT [1979] 118 ITR 200 (SC), IF THE BORROWED AMOUNT WAS DONATED FOR SOME S ENTIMENTAL OR PER- SONAL REASONS AND NOT ON THE GROUND OF COMMERCIAL E XPEDIENCY, THE INTER- EST THEREON COULD NOT HAVE BEEN ALLOWED UNDER SECTI ON 36(1)(III) OF THE ACT. IN MADHAV PRASADS CASE [1979] 118 ITR 200 (SC), TH E BORROWED AMOUNT WAS DONATED TO A COLLEGE WITH A VIEW TO COMMEMORATE THE MEMORY OF THE ASSESSEES DECEASED HUSBAND AFTER WHOM THE COLLEGE WAS TO BE NAMED. IT WAS HELD BY THIS COURT THAT THE INTEREST ON THE BOR ROWED FUND IN SUCH A CASE COULD NOT BE ALLOWED, AS IT COULD NOT BE SAID THAT IT WAS FOR COMMERCIAL EXPEDIENCY. 31. THE HIGH COURT AND THE OTHER AUTHORITIES SHOULD HAVE EXAMINED THE PURPOSE FOR WHICH THE ASSESSEE ADVANCED THE MONEY T O ITS SISTER CONCERN, AND WHAT THE SISTER CONCERN DID WITH THIS MONEY, IN ORDER TO DECIDE WHETHER IT WAS FOR COMMERCIAL EXPEDIENCY, BUT THAT HAS NOT BEEN DONE. 32. IT IS TRUE THAT THE BORROWED AMOUNT IN QUESTION WAS NOT UTILIZED BY THE ASSESSEE IN ITS OWN BUSINESS, BUT HAD BEEN ADVANCED AS INTEREST FREE LOAN TO ITS SISTER CONCERN. HOWEVER, IN OUR OPINION, THAT F ACT IS NOT REALLY RELEVANT. 9. FROM THE ABOVE IT IS CLEAR THAT THE COMMERCIAL E XPEDIENCY IS A GROUND ON WHICH THE CLAIM CAN BE ALLOWED AND IN OUR OPINION, ASSESSEE HAS NOT DISCHARGED ITS ONUS FOR DEMONSTRATING THE IMPUGNED EXPENDITURE CON SISTS OF SUCH COMMERCIAL EXPEDIENCY. THE ASSESSEE HAS TO DEMONSTRATE WHAT C OMMERCIAL LOSSES THAT WOULD OCCUR TO THE ASSESSEE IF THE ASSESSEE HAS NOT ADVAN CED LOANS TO THE SISTER CONCERNS. IF THE ASSESSEE FAILED TO DEMONSTRATE THE SAME, THE PRESUMPTION THAT THE AMOUNTS WERE ADVANCED FOR SENTIMENTAL OR PERSONAL REASONS C ANNOT BE RULED OUT. FURTHER, WE 7 EXAMINED THE CONCLUSIONS DRAWN BY THE CIT (A) IN PA RA 4.6 OF THE IMPUGNED ORDER WHICH READS AS UNDER: 4.6. NOW COMING TO THE FACTS OF THE INSTANT CASE, T HE ASSESSEE IS STATING THAT THE LOANS HAVE BEEN MADE TO ITS SISTER CONCERN, NAMELY M/S. LOK ENTERPRISES, WHO IN TURN HAS ADVANCED IT TO ITS SISTER CONCERNS. FIRSTLY, S ISTER CONCERN IS A VERY VAGUE TERM. IN S.A. BUILDERS THE SUPREME COURT HAD HELD INTEREST F REE ADVANCE GIVEN TO A SUBSIDIARY CONCERN AS BEING FOR THE PURPOSES OF BUSINESS. WHA T IS THE ASSESSEE COMPANYS EXACT BUSINESS RELATIONSHIP WITH M/S. LOK ENTERPRISES, HA S NOT BEEN EXPLAINED BY THE ASSESSEE. EVEN IF IT IS ASSUMED THAT THE ASSESSEE HAS BUSINESS INTEREST IN M/S. LOK ENTERPRISES, EVEN THEN THE ASSESSEE HAS NOT BEEN AB LE TO ESTABLISH HOW M/S. LOK ENTERPRISES HAS USED THE FUNDS FOR SOME BUSINESS PU RPOSE. IN FACT, M/S. LOK ENTERPRISES HAS FURTHER ADVANCED THESE FUNDS TO OTH ER CONCERNS, PRESUMABLY INTEREST FREE. THEREFORE, M/S. LOK ENTERPRISES HAS ALSO UTI LIZED THE FUNDS FOR NON-BUSINESS PURPOSES. CLEARLY, THE RATIO OF THE DECISION OF TH E SUPREME COURT IN S.A. BUILDERS GOES CONTRARY TO THE FACTS OF THE ASSESSEES CASE. MOREO VER, THE ASSESSEE IS HAVING NO BUSINESS ACTIVITY DURING THE YEAR. THIS FACT HAS N OT BEEN CHALLENGED BY THE ASSESSEE; EVEN THOUGH THE AO HAS CLEARLY HELD THAT THERE IS N O BUSINESS INCOME. THEREFORE, IN ANY CASE THE QUESTION OF ALLOWING EXPENDITURE U/S 3 6(1)(III) DOES NOT ARISE. THE ASSESSEE HAS ALSO NOT MADE OUT ANY CASE U/S 57. HE NCE, I AM INCLINED TO AGREE WITH AO THAT INTEREST U/S 36(1)(III) CANNOT BE ALLOWED. THIS GROUND OF APPEAL IS, THEREFORE, DISMISSED. 10. FROM THE ABOVE FACTUAL MATRIX OF THE CASE, WE A RE OF THE OPINION, THE IMPUGNED EXPENDITURE DOES NOT FALL WITHIN THE CONCE PT OF COMMERCIAL EXPEDIENCY. THEREFORE, WE FIND THAT THE ORDER OF THE CIT (A) DO ES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED . 0 ,1 # $0, * !02 * 2, 34 ORDER PRONOUNCED IN THE OPEN COURT ON 08/05/2013. . / * -.% ! 5#1 08/05/2013 . * 6 SD/- SD/- ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER MUMBAI; 5# DATED: 08/05/2013 . # . ./ OKK , SR. PS / / / / * ** * (,78 (,78 (,78 (,78 98%, 98%, 98%, 98%, / COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 8 3. : ( ) / THE CIT(A)- 4. : / CIT 5. 8;6 (,# , , / DR, ITAT, MUMBAI 6. 6$ < / GUARD FILE. )8, (, //TRUE COPY// /# /# /# /# / BY ORDER, = == = / 3 3 3 3 2 2 2 2 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI