Case Law Details
DCIT Vs Core Healthcare Ltd. (ITAT Ahmedabad)
During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has advanced loans of Rs 52,32,92,352 to a subsidiary company by the name of Span Medicals Ltd. When he probed the matter further, it was explained by the assessee that Span Medicals was a virtually defunct company and there was no commercial sense in providing for interest on this outstanding amount. It was also explained that the loan was originally given for sound commercial reasons, and that, in any event, interest free funds available to the assessee were far in excess of the this interest free advance- the share caoital and reserve and surplus itself exceeding Rs 345 crores. It was also explained that the borrowings by the assessee were used for its own business purposes, and that no part of these borrowings were used in advancing this interest free advance. None of these submissions, however, impressed the Assessing Officer. He was of the view that the assessee could have saved its huge interest burden only if the assessee had charged interest on interest free advance to its subsidiary. The Assessing Officer further noted that the ratio of this advance to the total borrowings is 3%. The Assessing Officer thus proceeded to disallow 3% of total interest paid by the assessee, which worked out to Rs 4,84,19,370. Aggrieved by the disallowance so made, assessee carried the matter in appeal before the CIT(A) who granted the relief by following a direct decision dated 5th June 2009 of a coordinate bench of this Tribunal, in assessee’s own case for the assessment years 1998-99 to 2002-03. The Assessing Officer is not satisfied and is in appeal before us.
We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We find that there is no dispute that the material facts and circumstances of this assessment year, vis-à-vis the assessment years 1998-99 to 2002-03, are materially similar. The relief on this issue was given by the coordinate bench was challenged by the Assessing Officer before Hon’ble High Court. We further find that earlier decision dated 5th June 2009 passed by the coordinate bench was carried in appeal before Hon’ble jurisdictional High Court on this issue, and, Their Lordships, vide judgment dated 26th July 2016, were pleased to confirm the decision of the Tribunal on the same. In this view of the matter, respectfully following the Hon’ble jurisdictional High Court’s judgment on the issue and having regard to the fact that the learned Departmental Representative has not pointed out any reasons whatsoever as to why the coordinate bench decision will not apply on this assessment year as well, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. No interference is called for.
FULL TEXT OF THE ITAT JUDGEMENT
1. We will first take up the appeal filed by the Assessing Officer.
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