Itta/441/2014 Of The Commissioner Of Income -Tax-I v. Anbience Properties Pvt. Ltd

HIGH COURT OF JUDICATURE AT HYDERABADFOR THE STATE OF TELANGANA AND THE STATE OF ANDHRAPRADESH PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA ANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.441 OF 2014 DATED: 16.07.2014 Between: The Commissioner of Income-tax-1, Hyderabad … Appellant And Ambience Properties Pvt Ltd … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTAANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.441of2014 JUDGMENT:(per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta) Judgment and order of the learned Tribunal dated22.01.2014 in I.T.A.No.58/Hyderabad/2012 in relation to theassessment year 2008-09, is impugned in this matter. The suggestedquestions of law to maintain this appeal are as follows: “1. Whether on the facts and circumstances of thecase and in law, the order of the Tribunal is notperverse in holding that interest bearing funds werenot at all diverted by the assessee to invest in itssister concerns.”?case and in law, the order of the Tribunal is notperverse in holding that interest bearing funds werenot at all diverted by the assessee to invest in itssister concerns.”? 2. Whether, in the facts and circumstances of thecase, the ITAT is correct in holding that nodisallowance of proportionate interest expenditurecan be made on account of interest free advancesgiven by the assessee, without appreciating thatthe said decision is contrary to its own findings inassessee’s own case for the A.Y.2007-08”?case, the ITAT is correct in holding that nodisallowance of proportionate interest expenditurecan be made on account of interest free advancesgiven by the assessee, without appreciating thatthe said decision is contrary to its own findings inassessee’s own case for the A.Y.2007-08”? We have heard Mr. Prasad, learned Standing Counselfor the Revenue, who insisted that the appeal should beadmitted on the finding of the learned Tribunal on fact that there has been no diversion of amount borrowed fromM/s.Platinum Properties Private Limited but the interest freefunds have been advanced to a sister concern. We havechecked up the aforesaid two suggested questions of lawand they are interlinked with each other and the main issueis whether conclusion of the learned Tribunal that themoney has not been diverted, is correct or not. It appears from the judgment and order of the learnedTribunal that the borrowed amount has been invested in thesister concern of the assessee in the form of subscribingshare capital. Therefore, we feel that the Tribunal is justifiedin concluding that the money has not been diverted to thirdparty as the assessee company invested the amount in asister concern, which is in the same group of shareholdings.In the sense, there is no diversion. It is settled position oflaw that business expediency cannot be ruled by third party,much less the Revenue. In these circumstances, we are unable to admit theappeal rejecting the contention of Mr. Prasad. The appeal is accordingly dismissed. No order as tocosts. ___________________ K.J. SENGUPTA, CJ 16[th] JULY, 2014. __________________ SANJAY KUMAR, J kvni