HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE 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 JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR
I.T.T.A.No.441 of 2014
JUDGMENT: (per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta)
Judgment and order of the learned Tribunal dated 22.01.2014 in I.T.A.No.58/Hyderabad/2012 in relation to the assessment year 2008-09, is impugned in this matter. The suggested questions of law to maintain this appeal are as follows:
“1. Whether on the facts and circumstances of the case and in law, the order of the Tribunal is not perverse in holding that interest bearing funds were not at all diverted by the assessee to invest in its sister concerns.”?
2. Whether, in the facts and circumstances of the case, the ITAT is correct in holding that no disallowance of proportionate interest expenditure can be made on account of interest free advances given by the assessee, without appreciating that the said decision is contrary to its own findings in assessee’s own case for the A.Y.2007-08”?
We have heard Mr. Prasad, learned Standing Counsel for the Revenue, who insisted that the appeal should be admitted on the finding of the learned Tribunal on fact that there has been no diversion of amount borrowed from M/s.Platinum Properties Private Limited but the interest free funds have been advanced to a sister concern. We have checked up the aforesaid two suggested questions of law and they are interlinked with each other and the main issue is whether conclusion of the learned Tribunal that the money has not been diverted, is correct or not.
It appears from the judgment and order of the learned Tribunal that the borrowed amount has been invested in the sister concern of the assessee in the form of subscribing share capital. Therefore, we feel that the Tribunal is justified in concluding that the money has not been diverted to third party as the assessee company invested the amount in a sister concern, which is in the same group of shareholdings. In the sense, there is no diversion. It is settled position of law that business expediency cannot be ruled by third party, much less the Revenue.
In these circumstances, we are unable to admit the appeal rejecting the contention of Mr. Prasad.
The appeal is accordingly dismissed. No order as to costs.
16th JULY, 2014.
K.J. SENGUPTA, CJ SANJAY KUMAR, J kvni