IN THE ITAT HYDERABAD BENCH ‘A’
Natco Pharma Ltd.
Versus
Deputy Commissioner of Income-tax
IT APPEAL NOS. 377 (HYD.) OF 2009 AND 487 & 686 (HYD.) OF 2010
[ASSESSMENT YEARS 2005-06 & 2006-07]
OCTOBER 31, 2012
ORDER
Chandra Poojari, Accountant Member
ITA No. 377/Hyd/2009 by the assessee is directed against the order of the CIT(A)-V, Hyderabad dated 27.1.2009 for the assessment year 2005-06. ITA No. 487/Hyd/2010 by the assessee and ITA No. 686/Hyd/2010 by the Revenue are directed against the order of the CIT(A)-V, Hyderabad dated 16.02.2010 for the assessment year 2006-07. Since all the above three appeals belong to one assessee and the issues are interlinked, these appeals are clubbed together, heard together and are being disposed of by this common order for the sake of convenience.
2. First we will take up assessee’s appeal in ITA No. 377/ Hyd/2009. The first ground in this appeal is with regard to sustaining of addition by the CIT(A) made by the Assessing Officer in disallowing Rs. 2,76,68,393 out of interest debited to Profit and Loss A/c. stating that interest free advances were given to group companies by the assessee and, therefore, interest relatable to such advances cannot be allowed as deduction.
3. Brief facts of the issue are that during the course of assessment proceedings the Assessing Officer noticed that the assessee has advanced loans amounting to Rs. 23,05,69,947 to six of its group companies as under:
