IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 214 of 2019 Date of decision: 15.1.2020 Pr. Commissioner of Income Tax (Central), Ludhiana .. Appellant v. M/s Genex Industries Ltd. .. Respondent CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Mr. Rajesh Katoch, Senior Standing Counsel and Ms. Pridhi Jaswinder Sandhu, Junior Standing Counsel for appellant. ... AVNEESH JHINGAN, J. This order shall dispose of ITA Nos. 214, 208 and 217 of 2019, as similar questions are raised. revenue has filed appeals under Section 260A of Income Tax Act, 1961 (for short, 'the Act'). For sake of convenience, facts from ITA No. 214 of 2019 have been taken. Following substantial questions of law have been claimed: (i) Whether in facts and circumstances of case, order of Hon'ble ITAT is perverse as it has ignored lack of business purpose and commercial expediency of transaction and decided issue only on account of availability of interest free funds with assessee company. MANOJ KUMAR 2020.01.21 13:52 I attest to accuracy and (ii) Whether in facts and circumstances of case and in authenticity of this document High Court,Chandigarh ITA No. 214 of 2019 [2] law, Hon'ble ITAT has erred in confirming decision of CIT (A) without examining that transaction was without any business consideration or commercial expediency and therefore, interest claimed on borrowed funds was not allowable u/s 36(1)(iii) of Income Tax Act, 1961. (iii) Whether impugned order dated 31.10.2018 passed by ITAT is sustainable in eyes of law or maintainable in facts and circumstances of case. facts in brief are that assessment year involved is 2012- 13. Assessing Officer during assessment proceedings noticed fact that assessee had given interest free advances to its group concerns but was claiming interest expenses on borrowed capital. assessment order dated 31.3.2016 was passed under Section 153A of Act, disallowing interest claimed under Section 36(1)(iii) of Act. Commissioner of Income Tax (Appeal) (hereinafter referred to as ' Appellate Authority') partly allowed appeal vide order dated 22.2.2018, considering fact that there were sufficient interest free funds available with assessee from which interest free loan and advances were made. It was held that finding recorded on transfer of interest bearing funds to group concerns cannot be sustained. Addition made by disallowing interest claimed under Section 36(1)(iii) of Act was set aside. revenue filed appeal before Tribunal. appeal was dismissed on 31.10.2018. Tribunal upheld finding of Appellate Authority that there were sufficient interest free funds for advancing loan to group concerns. Reliance was placed upon decision of this Court in Bright Enterprises MANOJ KUMAR 2020.01.21 13:52 I attest to accuracy and authenticity of this document High Court,Chandigarh ITA No. 214 of 2019 [3] (P.) Ltd. v. Commissioner of Income Tax, 2016 (381) ITR 107. Learned counsel for revenue is not in position to dispute that matter with regard to disallowance of deduction under Section 36(1)(iii) of Act is covered in favour of assessee by decision of this Court in Bright Enterprises (P.) Ltd.'s case (supra) and of Supreme Court in S.A. Builders Ltd. v. Commissioner of Income Tax (Appeals) and another, 2007 (15) SCC 147. However, it is argued that Tribunal has not decided issue of commercial expediency for making advances to group concerns of assessee. There is no dispute raised that advances made to group concerns were of assessee. Moreover, said issue was never pressed before Tribunal as is evident from order. Nothing has been produced to show that issue was raised and pressed at time of arguing appeal. For reasons mentioned above, no interference is called for in order of Tribunal. appeals are dismissed. (AVNEESH JHINGAN) (AJAY TEWARI) JUDGE JUDGE 15.1.2020 mk Whether speaking/reasoned: Yes/No Whether reportable: Yes/No MANOJ KUMAR 2020.01.21 13:52 I attest to accuracy and authenticity of this document High Court,Chandigarh Pr. Commissioner of Income-tax (Central), Ludhiana v. Genex Industries Ltd