Itxa 213-17-O v. Cit[1] And Concluded As Under

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.213 OF 2017 The Pr.Commissioner of Income Tax-9… Appellant V/s. M/s E-City Investments & Holdings… Respondent --- Mr.Tejveer Singh for the Appellant.Mr.Ravi Savana with Mr.Aman Gahlot with Ms.Divyasha Mthuri/by M/s PDS Legal for the Respondent. --- CORAM : AKIL KURESHI AND SARANG V.KOTWAL, JJ. DATE : APRIL 22, 2019. P.C.:- 1. Revenue has filed this appeal against the judgment of theIncome Tax Appellate Tribunal. Following question is presentedfor our consideration:- “Whether on the facts and circumstances of the caseand in law, the ITAT erred in not upholding thedecision of the Ld.CIT (A) in allowing assessee'sclaim for deduction of interest on borrowed fundwhen the same is utilised to give interest freeloan/share application money to subsidiarycompanies?” Priya Soparkar 215 itxa 213-17-o 2.Respondent-assessee is a private limited company and isengaged in the business of financing. During the scrutinyassessment of the assessee's return for the assessment year 2008-09, Assessing Officer noticed that the assessee had claimedexpenditure of interest paid on borrowed funds. The assessee hadalso funded its sister concern without charging interest. TheAssessing Officer therefore disallowed the interest expenditure.The issue eventually reached the Tribunal. The Tribunal by theimpugned judgment held in favour of the assessee. The Tribunalreferred to and relied upon the decision of the Supreme Court incase of S.A. Builders Ltd. Vs. CIT[1] and concluded as under :- “If the aforesaid ratio laid down by Hon'ble ApexCourt is analyzed by keeping the same injuxtaposition with the facts of the present appeal,firstly, we find that there is no finding by theAssessing Officer that the funds were not utilizedfor business purposes and secondly, we note thatadvancing loan to the sister-concern was for thepurposes of “Commercial Expediency”, thus, wefind merit in the contention of the ld. counsel forthe assessee. So far as, the issue of commercialexpediency is concerned, the decision has to betaken by the assessee and the Assessing Officer isnot expected to sit in the chair of the assessee andto decide the business interest. The assessee is towatch its business interest well. Once it isestablished that there was nexus between the expenditure and purpose of the business (whichneed not necessarily be the business of theassessee itself) the Revenue cannot justifiablyclaim to put itself in the arm-chair of thebusinessman or in the position of the board ofdirectors and assume the role to decide how muchis reasonable expenditure having regard to thecircumstances of the case. No businessman can becompelled to maximize his profits.” 3.We do not find any error in view of the Tribunal. The entireissue is squarely covered in favour of the assessee in case ofS.A.Builders Ltd. (supra). The Tribunal correctly held that theassessee's decision to fund its subsidiaries driven by businessexigency. 4. In the result, no question of law arises. Income Tax appealis dismissed. (SARANG V.KOTWAL,J.) (AKIL KURESHI,J.)….