S.A. Builders Ltd. v. CIT

288 ITR 1Supreme Court of India2007#26 most cited

What is S.A. Builders Ltd. v. CIT authority for?

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

1,484

judgments rely on this decision, according to BharatTax’s citation analysis of 367,181 Indian tax judgments — from 2008 to 2026.

Also referred to as

S.A. Builders Ltd. v. CIT · 288 ITR 1 · Section 36(1)(iii) · commercial expediency · business expediency · interest-free advances · disallowance of interest · onus to prove business purpose · borrowed funds · Revenue interference

Also reported as

158 Taxmann 74158 Taxmann.com 74

Sections most often in play

Section 143(3)Section 36(1)(iii)Section 14ASection 1961Section 148Section 147Section 40(a)(ia)Section 142(1)
Read the full judgment

Issues it is cited on

commercial expediencyinterest free advancessection 36(1)(iii)business expediencydisallowance of interest expendituresection 36(1)section 36revenue expendituresection 37(1)section 37capital expendituresection 14a

Judgments citing S.A. Builders Ltd. v. CIT

ACIT, New Delhi vs. Ireo Pvt. Ltd., New Delhi

In the result, the appeal of the revenue in ITA No

ITA 910/DEL/2017[2010-11]Status: DisposedITAT Delhi16 May 2023AY 2010-11

Bench: Shri Saktijit Dey & Shri M. Balaganesh

For Appellant: Shri S. Krishnan, AdvocateFor Respondent: Shri Mohd. Gayasuddin Ansari, CIT, DR
Section 132Section 153A

…thority to dictate the assessee as to how he should conduct his business and what expenditure should be incurred by the assessee, irrespective of the profitability or considering future prospects. Reliance is placed in the case of S.A. Builders Vs CIT (2006) (289 ITR 26), where the Hon'ble Supreme Court has held that "the revenue cannot justifiably claim to place itself in the arm chair of businessman, or in the position of the Board of Directors and assume the role to decide how much ITA Nos.2849 &2850/Del/2016; CO No.235 & 236/Del/2016; ITA Nos.910 & 911/Del/2017; & CO No.99 & 100/Del/2017 the expenditure is r…

ACIT, New Delhi vs. M/S. Ireo Waterfront Pvt. Ltd., New Delhi

In the result, the appeal of the revenue in ITA No

ITA 2850/DEL/2016[2011-12]Status: DisposedITAT Delhi16 May 2023AY 2011-12

Bench: Shri Saktijit Dey & Shri M. Balaganesh

For Appellant: Shri S. Krishnan, AdvocateFor Respondent: Shri Mohd. Gayasuddin Ansari, CIT, DR
Section 132Section 153A

…thority to dictate the assessee as to how he should conduct his business and what expenditure should be incurred by the assessee, irrespective of the profitability or considering future prospects. Reliance is placed in the case of S.A. Builders Vs CIT (2006) (289 ITR 26), where the Hon'ble Supreme Court has held that "the revenue cannot justifiably claim to place itself in the arm chair of businessman, or in the position of the Board of Directors and assume the role to decide how much ITA Nos.2849 &2850/Del/2016; CO No.235 & 236/Del/2016; ITA Nos.910 & 911/Del/2017; & CO No.99 & 100/Del/2017 the expenditure is r…

ACIT, New Delhi vs. M/S. Ireo Waterfront Pvt. Ltd., New Delhi

In the result, the appeal of the revenue in ITA No

ITA 2849/DEL/2016[2010-11]Status: DisposedITAT Delhi16 May 2023AY 2010-11

Bench: Shri Saktijit Dey & Shri M. Balaganesh

For Appellant: Shri S. Krishnan, AdvocateFor Respondent: Shri Mohd. Gayasuddin Ansari, CIT, DR
Section 132Section 153A

…thority to dictate the assessee as to how he should conduct his business and what expenditure should be incurred by the assessee, irrespective of the profitability or considering future prospects. Reliance is placed in the case of S.A. Builders Vs CIT (2006) (289 ITR 26), where the Hon'ble Supreme Court has held that "the revenue cannot justifiably claim to place itself in the arm chair of businessman, or in the position of the Board of Directors and assume the role to decide how much ITA Nos.2849 &2850/Del/2016; CO No.235 & 236/Del/2016; ITA Nos.910 & 911/Del/2017; & CO No.99 & 100/Del/2017 the expenditure is r…

Kadavanthara Builders Pvt Ltd, Chennai vs. ITO, Ward -4(2), Chennai

The appeal of the assessee is partly allowed for statistical purposes

ITA 2485/CHNY/2019[2015-16]Status: DisposedITAT Bangalore12 May 2023AY 2015-16
Section 143(3)

…s not justified in placing himself in the shoes of the assessee and questioning assessee’s ITA Nos.2484 & 2485/CHNY/2019 Page 14 of 26 judgment. In this regard, reliance is placed on the decision of Hon’ble Apex Court in the case of S.A Builders reported in 288 ITR 1 (SC). The Courts across the country have held that determination of expenses into revenue/capital is the discretion of the assessee and AO cannot sit in assessee’s arm chair to re-determine the same. 15. He further submitted that it is settled position in taxation law that whether the money paid is a revenue expenditure or capital expenditure depe…

Kadavanthara Builders Pvt Ltd, Chennai vs. ITO, Ward -4(2), Chennai

The appeal of the assessee is partly allowed for statistical purposes

ITA 2484/CHNY/2019[2014-15]Status: DisposedITAT Bangalore12 May 2023AY 2014-15
Section 143(3)

…s not justified in placing himself in the shoes of the assessee and questioning assessee’s ITA Nos.2484 & 2485/CHNY/2019 Page 14 of 26 judgment. In this regard, reliance is placed on the decision of Hon’ble Apex Court in the case of S.A Builders reported in 288 ITR 1 (SC). The Courts across the country have held that determination of expenses into revenue/capital is the discretion of the assessee and AO cannot sit in assessee’s arm chair to re-determine the same. 15. He further submitted that it is settled position in taxation law that whether the money paid is a revenue expenditure or capital expenditure depe…

Assistant Commissioner of Income Tax, Circle 1(1), Raipur vs. M/S Hotel Ishika, Raipur

ITA 235/RPR/2017[2008-09]Status: DisposedITAT Raipur28 Apr 2023AY 2008-09

Bench: Shri Ravish Soodआयकर अपील सं./ Ita No. 235/Rpr/2017 "नधा"रण वष" / Assessment Year : 2008-09 The Assistant Commissioner Of Income Tax, Circle-1(1), Raipur (C.G.) .......अपीलाथ" / Appellant बनाम / V/S. M/S. Hotel Ishika, A-08, Shubham Vihar, New Purena Raipur, Pan : Aadfh8557L

For Appellant: NoneFor Respondent: Shri Piyush Tripathi, Sr. DR
Section 143(3)Section 147Section 36(1)(iii)

…hich is in violation of the legal provisions of the Act u/s 36(1)(iii) of the I T Act, 1961?" 3. "Whether on points of law, the Ld. CIT(A) was justified in not considering the ratio laid down by the Hon'ble Apex Court in the case of S.A. Builders Ltd. vs CIT [288 ITR 1,9, Supreme Court], since as per the facts on record the assessee has advanced the interest free funds to the sister concern/relatives without establishing the components of "commercial expediency" in these transactions?" 4. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT (A) was justified in holding that since the re…

D.C.C.T., Circle-3(1), Kolkata vs. M/S Narsingh Ispat Ltd., Kolkata

In the result, the appeal of the Revenue is dismissed

ITA 1513/KOL/2019[2011-12]Status: HeardITAT Kolkata18 Apr 2023AY 2011-12

Bench: Shri Sanjay Garg & Dr. Manish Boradi.T.A. No. 1513/Kol/2019 Assessment Year: 2011-2012 Deputy Commissioner Of Income Tax,.........Appellant Circle-3(1), Kolkata, Aayakar Bhawan, 4Th Floor, Room No. 19, P-7, Chowringhee Square, Kolkata-700069 -Vs.- M/S. Narsingh Ispat Limited,....................Respondent 16, Strand Road, Fairly Place, 15Th Floor, Diamond Heritage, Unit-1512, Kolkata-700001 [Pan: Aaccn0208J] Appearances By: Shri P.P. Barman, Addl. Cit, Sr. D.R., Appeared On Behalf Of The Revenue Shri Miraj D. Shah, A.R., Appeared On Behalf Of The Assessee Date Of Concluding The Hearing : April 05, 2023 Date Of Pronouncing The Order : April 18, 2023 O R D E R

Section 132Section 133ASection 143(1)Section 143(3)Section 148Section 68Section 69C

…ITA No. 1513/KOL/2019 Assessment Year: 2011-2012 M/s. Narsingh Ispat Limited IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH, KOLKATA Before Shri Sanjay Garg, Judicial Member & Dr. Manish Borad, Accountant Member I.T.A. No. 1513/KOL/2019 Assessment Year: 2011-2012 Deputy Commissioner of Income Tax,.........Appellant Circle-3(1), Kolkata, Aayakar Bhawan, 4th Floor, Room No. 19, P-7, Chowringhee Square, Kolkata-700069 -Vs.- M/s. Narsingh Ispat Limited,....................Respondent 16, Strand Road, Fairly Place, 15th Floor, Diamond Heritage, Unit-1512, Kolkata-700001 [PAN: AACCN0208J] Appearances by: Shri P.P.…

M/S Overseas Leathers, Ranipet vs. DCIT, Chennai

In the result, appeal filed by the assessee is allowed

ITA 962/CHNY/2022[2018-19]Status: DisposedITAT Chennai05 Apr 2023AY 2018-19

Bench: Shri Aby T. Varkey, Hon’Ble & Shri Manjunatha. G, Hon’Bleआयकर अपील सं./Ita No.: 962/Chny/2022 िनधा"रण वष" / Assessment Year: 2018-19 M/S. Overseas Leathers, Deputy Commissioner Of No. 131, Sidco Industrial V. Income-Tax, Estates, Central Circle -3(3), Sipcot, Ranipet, Ranipet New No. 46, Old No. 108, District – 632 403 Mahatma Gandhi Road, [Pan: Aaafo-0375-L] Chennai – 600 034. (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri. D. Anand, Advocate : Shri. P. Sajit Kumar, Jcit ""यथ" क" ओर से/Respondent By सुनवाई की तारीख/Date Of Hearing : 20.03.2023 घोषणा की तारीख/Date Of Pronouncement : 05.04.2023

For Appellant: Shri. D. Anand, Advocate
Section 115BSection 69B

…godown and the same was given on rent by the assessee. Therefore once commercial expediency for giving the advance is established, no part of the interest expenditure can be disallowed in view of the decision of Hon’ble Supreme Court in case of S.A. Builders 288 ITR 1 and Hero Cycles Pvt. Ltd. vs. CIT 379 ITR 347 where it was held that the Revenue cannot justifiably claim to put itself in the arm- chair of the businessman or in the position of the Board of Directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. If further held that no businessman…

Asuda Holdings Private Limited, Mumbai vs. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Mumbai

In the result, appeal filed by the assessee is partly allowed

ITA 2854/MUM/2022[2014-2015]Status: DisposedITAT Mumbai03 Apr 2023AY 2014-2015

Bench: Shri Kuldip Singh, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 36(1)(iii)Section 50(1)Section 50(2)

…ment is the most important yardstick for the allowability of deduction Under Section 36(1)(iii) of Income Tax Act, 1961. While explaining the meaning of this phrase the Hon'ble Supreme Court in the case of S. A. Builders Ltd. Vs CIT(A), Chandigarh reported in 288 ITR 1 has used the word "commercial expediency By using this phrase Hon'ble Supreme Court has given a new dimension and clarified the concept further in the judgement the Supreme Court has defined commercial expediency as "an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditu…

Kamineni Health Services Private Limited, Hyderabad vs. Dy. Commissioner of Income Tax, Circle-2(1), Hyderabad

In the result, appeal filed by the assessee is partly allowed

ITA 90/HYD/2018[2013-14]Status: DisposedITAT Hyderabad31 Mar 2023AY 2013-14

Bench: Shri R.K. Panda & Shri K. Narasimha Charyassessment Year: 2013-14 Kamineni Health Services Vs. Dy. C. I. T. (P) Ltd, Hyderabad Circle 2(1) Pan:Aaack8313R Hyderabad (Appellant) (Respondent) Assessee By: Advocate Sashank Dundu Revenue By: Shri Kumar Aditya, Dr Date Of Hearing: 22/02/2023 Date Of Pronouncement: 31/03/2023 Order Per R.K. Panda, A.M This Appeal Filed By The Assessee Is Directed Against The Order Dated 7Th Nov.2017 Of The Learned Cit (A)-2, Hyderabad Relating To A.Y.2013-14. 2. Facts Of The Case, In Brief, Are That The Assessee Is A Company Engaged In The Business Of Healthcare. It Filed Its Return Of Income For The Impugned A.Y Declaring Nil Income After Setting Off Of Business Loss Of Rs.48,33,667/- Under The Normal Provision & Book Profits U/S 115Jb Amounting To Rs. 1,38,45,489/-. The Case Was Selected For Scrutiny Through Cass & Statutory Notices U/S 143(2) & 142(1) Were Issued To The Assessee To Page 1 Of 16

For Appellant: Advocate Sashank DunduFor Respondent: Shri Kumar Aditya, DR
Section 115JSection 143(2)Section 14ASection 36(1)(iii)

…shares were also allotted by that company against such advances. Page 5 of 16 ITA 90 of 2018 Kamineni Health Services P Ltd 5. The learned CIT (Appeals) ought to have considered the decision of the Hon'ble Supreme Court in the case of S.A. Builders v. CIT 288 ITR 1 (SC) and ACIT vs. Tulip Star Hotels Ltd. (2012) (SC), the facts of which are squarely applicable to the case of appellant. 6. Without prejudice to the above grounds, the learned CIT (Appeals) grossly erred in disallowing finance cost @ 12% on the advance given to United Steel Allied Industries Pvt Ltd (USAIPL) of Rs 95,50,483/-. 7. The appellant cr…

M/S. Ecoplast Ltd., Valsad vs. Asst. Cmmissioner of Income Tax, Valsad Renge, Valsad

In the result, appeal filed by the assessee is allowed

ITA 545/SRT/2019[2016-17]Status: DisposedITAT Surat30 Mar 2023AY 2016-17

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita No.545/Srt/2019 "नधा"रण वष"/Assessment Year: (2016-17) (Physical Court Hearing) Ecoplast Ltd., Vs. The Acit, Valsad Circle, S No.309, National Highway No.8, Valsad. Water Works Cross Road, Abrama, Valsad – 396002. (Assessee) (Respondent) "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaace5030H

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 36(1)(iii)

…IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.545/SRT/2019 "नधा"रण वष"/Assessment Year: (2016-17) (Physical Court Hearing) Ecoplast Ltd., Vs. The ACIT, Valsad Circle, S No.309, National Highway No.8, Valsad. Water Works Cross Road, Abrama, Valsad – 396002. (Assessee) (Respondent) "थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAACE5030H Assessee by Shri Sapnesh Sheth, CA Respondent by Shri Vinod Kumar, Sr. DR 23/02/2023 Date of Hearing Date of Pronouncement 30/03/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the as…

ACIT, Circle- 5(1), New Delhi vs. Blue Coast Hotels Ltd., New Delhi

In the result, the appeal filed by the Revenue is dismissed

ITA 287/DEL/2020[2016-17]Status: DisposedITAT Delhi17 Mar 2023AY 2016-17

Bench: Shri C.M. Garg & Shri Pradip Kumar Kediaassessment Year: 2016-17 Acit, Vs. Blue Coast Hotels Ltd., Circle-5(1), 415-417, Antriksh Bhawan, New Delhi. 22, Kg Marg, New Delhi. Pan: Aaacm0037G (Appellant) (Respondent) Assessee By : Shri Ved Jain, Advocate & Shri Aman Garg, Ca Revenue By : Shri P. Praveen Sidharth, Cit, Dr Date Of Hearing : 16.01.2023 Date Of Pronouncement : 17.03.2023 Order Per C.M. Garg, Jm: This Appeal Filed By The Revenue Is Directed Against The Order Of The Cit(A)-2, New Delhi, Dated 21.10.2019, For Assessment Year 2016-17. 2. The Revenue Has Raised The Following Grounds Of Appeal:- “1. Whether On The Facts & In The Circumstances Of The Case & In Law, Whether The Ld Cit(A) Has Erred In Not Appreciating The Fact That There Was No Commercial Expediency Due To Which The Assessee Had Granted Interest Free Loans To Its Subsidiaries & Bore The Burden Of Interest For Their Sake. 2. Whether On The Facts & In The Circumstances Of The Case & In Law, Whether The Ld Cit(A) Has Erred In Deleting The Addition Of Rs.10,20,24,116/- Made U/S 14A Of The It Act, 1961 Without Appreciating The Facts Mentioned By The Ao For Disallowing Such Amount On The

For Appellant: Shri Ved Jain, Advocate &For Respondent: Shri P. Praveen Sidharth, CIT, DR
Section 14ASection 36(1)(iii)Section 43B

…he same parties, in appellant’s favour in A.Ys 2012-13, 2013-14 and 2014-15. The CIT(A) has held the purpose of loans to these two parties as utilisation of funds for business purposes in the light of Supreme Court decisions in the cases of SA builders vs CIT 288 ITR 1 and Hero Cycles vs CIT 63 Taxman.com 308. 6.5 The issue being the same, is covered by the appellate decisions of my predecessor in three assessment years and is, accordingly, followed. The ground is allowed.” 6. In view of the above, the main basis for granting relief to the assessee is the orders of the ld. First appellate authority for precedin…

Vodafone Essar Ltd., Mumbai vs. Addl. CIT, Chandigarh

ITA 216/CHANDI/2011[2006-07]Status: DisposedITAT Mumbai16 Mar 2023AY 2006-07

Bench: Shri Vikas Awasthy & Shri M. Balaganeshआअसं. 216/ चंडी/2011 (िन.व. 2006-07) आअसं. 1173/चांडी /2011 (िन.व. 2007-08) Vodafone India Ltd. (Formerly Known As ‘ Vodafone Essar Limited’) Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013. ...... अपीलाथ"/Appellant Pan:Aaach-5332-B बनाम Vs. Additional Commissioner Of Income Tax, Range -1, ..... ""तवाद"/Respondent Chandigarh. अपीलाथ" "वारा/ Appellant By : Shri Salil Kapoor With S/Shri Vibhu Jain & Ninad Patade ""तवाद" "वारा/Respondent By : Shri Anand Mohan

For Appellant: Shri Salil Kapoor with S/Shri Vibhu Jain and Ninad PatadeFor Respondent: Shri Anand Mohan
Section 115JSection 144C(13)Section 14ASection 234BSection 271(1)(c)Section 40Section 80I

…ferent telecom circles. Therefore, loan advanced by the assessee to its group concerns were driven by commercial expediency. In support of his submissions the ld.Counsel for the assessee placed reliance on the decision in the case of SA Builders Ltd. vs. CIT, 288 ITR 1(SC). 17.1 The ld.Counsel for the assessee pointed that interest free loans to the tune of Rs.830 crores were advanced to the subsidiaries. The assessee has own sufficient interest free funds to cover such interest free loans. The ld.Counsel for the assessee referred to the Balance Sheet of the assessee as on 31/03/2006 to show that own funds of th…

M/S Vodafone Essar Ltd., Mumbai vs. Addl. CIT, Chandigarh

ITA 1173/CHANDI/2011[2007-08]Status: DisposedITAT Mumbai16 Mar 2023AY 2007-08

Bench: Shri Vikas Awasthy & Shri M. Balaganeshआअसं. 216/ चंडी/2011 (िन.व. 2006-07) आअसं. 1173/चांडी /2011 (िन.व. 2007-08) Vodafone India Ltd. (Formerly Known As ‘ Vodafone Essar Limited’) Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013. ...... अपीलाथ"/Appellant Pan:Aaach-5332-B बनाम Vs. Additional Commissioner Of Income Tax, Range -1, ..... ""तवाद"/Respondent Chandigarh. अपीलाथ" "वारा/ Appellant By : Shri Salil Kapoor With S/Shri Vibhu Jain & Ninad Patade ""तवाद" "वारा/Respondent By : Shri Anand Mohan

For Appellant: Shri Salil Kapoor with S/Shri Vibhu Jain and Ninad PatadeFor Respondent: Shri Anand Mohan
Section 115JSection 144C(13)Section 14ASection 234BSection 271(1)(c)Section 40Section 80I

…ferent telecom circles. Therefore, loan advanced by the assessee to its group concerns were driven by commercial expediency. In support of his submissions the ld.Counsel for the assessee placed reliance on the decision in the case of SA Builders Ltd. vs. CIT, 288 ITR 1(SC). 17.1 The ld.Counsel for the assessee pointed that interest free loans to the tune of Rs.830 crores were advanced to the subsidiaries. The assessee has own sufficient interest free funds to cover such interest free loans. The ld.Counsel for the assessee referred to the Balance Sheet of the assessee as on 31/03/2006 to show that own funds of th…

Pr Commissioner of Income Tax- 4 vs. M/S Jupiter

Appeal is allowed in part accordingly

ITA/297/2017HC Karnataka13 Mar 2023

Bench: P.S.DINESH KUMAR,C.M. POONACHA

Section 14ASection 260Section 36(1)(ii)Section 37Section 40A(2)

…- 1 - ITA No. 297 of 2017 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF MARCH, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 297 OF 2017 BETWEEN: 1. PR COMMISSIONER OF INCOME TAX- 4 BMTC COMPLEX, KORAMANGALA, BANGALORE 2. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 11(5), BANGALORE …APPELLANTS (BY SRI. E I SANMATHI., STANDING COUNSEL) AND: 1. M/S JUPITER ENTERTAINMENT VENTURES (P) LTD., NO.54, RICHMOND ROAD, BANGALORE-560025 PAN:AABCJ7071Q …RESPONDENT (BY SRI. NAR…

Planet Gogo Private Ltd., Gurgaon vs. ITO Ward-3(2), Gurgaon

In the result, the appeal is allowed

ITA 1526/DEL/2022[2016-17]Status: DisposedITAT Delhi24 Feb 2023AY 2016-17

Bench: Shri Saktijit Deyassessment Year: 2016-17

Section 56(2)Section 56(2)(viib)

…ncome tax department or revenue official cannot guide a businessman in which manner risk has to be undertaken. Such an approach of the revenue has been judicially frowned by the Hon'ble Apex Court on several occasions, for instance in the case of SA Builders, 288 ITR 1 (SC) and CIT vs. Panipat Woollen and General Mills Company Ltd., 103 ITR 66 (SC). The Courts have held that Income Tax Department cannot sit in the armchair of businessman to decide what is profitable and how the business should be carried out. Commercial expediency has to be seen from the point of view of businessman. Here in this case if the inve…

M/S. Rmz Hotels Private Limited, Bangalore vs. National E-Assessment Centre, Delhi

In the result, the appeal of the assessee is allowed

ITA 954/BANG/2022[2018-19]Status: DisposedITAT Bangalore22 Feb 2023AY 2018-19

Bench: Shri Chandra Poojariassessment Year: 2018-19

For Appellant: Shri V. Srinivasan, A.RFor Respondent: Shri Ganesh R. Ghale, Standing Counsel for Department
Section 234Section 255Section 255(3)Section 36

…bearing funds was not at all used for the purpose of loan to M/s. S.P. Apparels Limited. Further he M/s. RMZ Hotels Private Limited, Bangalore Page 36 of 79 relied on the judgment of the Supreme Court in the case of S.A. Builders Ltd vs. CIT (A) and another 288 ITR 1(SC) wherein held that In order to decide whether interest on funds borrowed by the assessee to give an interest free loan to a sister concern(eg., a subsidiary of the assessee) should be allowed as a deduction under section 36(1)(iii) of the Income-tax Act, 1961, one has to enquire whether the loan was given by the assessee as measure of commercial…

ACIT Cir -4(2) (1), Thane vs. M/S. Mukti Gold Pvt. Ltd, Mumbai

Appeal is partly allowed for statistical purpose and the assessee’s C

ITA 1804/MUM/2022[2017-18]Status: DisposedITAT Mumbai17 Feb 2023AY 2017-18
Section 143(3)Section 37(1)Section 68

…r, the Apex Court in the case of CIT v. Walchand & Co. (P.) Ltd. [1967] 65 ITR 381; J.K. Woollen Mfg. v. CIT [1969] 72 ITR 612 (SC) ; Aluminium Corporation of India Ltd. v. CIT [1972] 86 ITR 11 (SC) and S.A. Builders Ltd. v. CIT (Appeals) [2007] 158 Taxman 74/288 ITR 1 (SC) has held that any expenditure incurred out of commercial expediency, the same is an allowable deduction. The commercial expediency is to be considered from the angle of businessman and not from the angle of Revenue. The Revenue cannot sit in the arm chair of businessman and dictate the terms to the assessee as to how one is required to conduct…

Trimex Industries Pvt Ltd, Chennai vs. CIT(A)-18, Chennai

In the result, appeal filed by the assessee is allowed

ITA 13/CHNY/2022[2010-11]Status: DisposedITAT Chennai15 Feb 2023AY 2010-11

Bench: Shri V. Durga Rao, Hon’Ble & Shri G. Manjunatha, Hon’Bleआयकर अपील सं./Ita No.: 13/Chny/2022 िनधा"रण वष" / Assessment Year: 2010-11

For Respondent: Shri. D. Hema Bhupal, JCIT
Section 36(1)(iii)

…ant is heavy inasmuch as there was justification to lend interest free loan to sister concern that in spite of outstanding loans on which the appellant is incurring liability to pay interest. 12. The Hon'ble Apex Court in the case of S.A.Builders Ltd. Vs CIT (288 ITR 1) has held that the correct approach to the issue of grant of deduction u/s 36(1iii) would be to examine whether the amount advanced to the subsidiary or associated company or- any other party was advanced as a measure of commercial expediency and not from the point of view whether the amount was advanced for earning profits. It was held that if the…

ACIT, Circle- 27(1), New Delhi vs. Unitech Ltd., New Delhi

In the result, appeal is partly allowed

ITA 8914/DEL/2019[2012-13]Status: DisposedITAT Delhi15 Feb 2023AY 2012-13

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kedia

For Appellant: NoneFor Respondent: Ms. Sapna Bhatia, CIT-DR
Section 14ASection 271(1)(c)Section 40A(3)

…usiness purpose. Accordingly, we hold that such an advance was for commercial expediency and therefore, no disallowance could have been made in view of the judgment of Hon’ble Supreme Court in the case of SA Builders Ltd. vs I.T.A. No.8914/Del/2019 8 CIT(A) 288 ITR 1(SC). 31. It is further noticed that the assessee company had huge surplus funds which far exceeded the advances; and therefore, without their being a nexus proved by the AO that only borrowed funds were advanced, then presumption can be drawn that such advances have been given out of interest free funds. This view is now well supported by various j…