Itta/143/2013 Of The Commissioner Of Income Tax v. M/S. Balaji Industrial Corporation Ltd

HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.No.143 of 2013 Date: 28.06.2013 Between: Commissioner of Income Tax,Guntur. .....Appellant AND M/s Balaji Industrial Corporation LtdNellore. ...Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.No.143 of 2013 JUDGMENT: (per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) This appeal is sought to be admitted on the following suggested questions of law: i.That the order of the ITAT is contrary to law,evidence on record and vitiated by materialirregularities. ii.In the facts and circumstances of the case, whenthe Assessing Officer considering the fact that theassessee has diverted substantial amount ofborrowed funds by way of interest free advance toa sister concern with different businessbackground and the same being without anycommercial expediency or business purpose,disallowed the assessee’s claim proportionately inrespect of interest expenditure and guaranteecommission on its borrowed funds, whether theorder of the Tribunal that the said two amountscannot be disallowed without considering therelevant material on record is not erroneous andperverse in law? iii.The Tribunal erroneously did not consider thedistinguishable facts in the decisions of theHon’ble Supreme Court, relied by it while decidingthe subject issues and hence its findings areerroneous in law and contrary to the material onrecord? iv.When the assessee diverts by way of advances, a substantial amount without charging any intereston borrowed funds to a sister concern with totallydifferent business, whether it is entitled to claimthe interest expenditure and guaranteecommission on borrowed funds as allowableexpenditure in law? The appeal is preferred against the judgment and order ofthe learned Tribunal dated 03.02.2009 in relation to theassessment year 2001-02. We have heard the learned Counsel for the appellant andgone through the impugned judgment and order. The learned Tribunal has held that the interest on theborrowed funds in respect of the amount advanced to sisterconcerns cannot be disallowed. Similarly, the guaranteecommission paid by the assessee to the sister concerns is also anallowable expenditure since it was paid for business purposes. The learned Tribunal has not only relied on the decision of theVisakhapatnam Bench in the assessee’s own case for theassessment year 1998-99, but also the decision of the SupremeCourt in the case of S.A.Builders (288 ITR 1). The learnedTribunal has decided the matter on correct proposition of law.Therefore, we do not find any reason to interfere with the judgmentand order of the learned Tribunal. Accordingly, the appeal is dismissed. No order as to costs. Miscellaneous petitions, if any, pending shall also standclosed. ___________________ K.J. SENGUPTA, CJ _______________ G.ROHINI, J 28.6.2013 Gsn.