INCOME TAX Vs. MOTOR GENERAL FINANCE LTD.

JUDGEMENT

(1.) ON remand made by the Supreme Court in Civil Appeal No. 1479 of 2004 in the case of Motor General Finance Ltd. vs.

(2.) FROM the order of the Tribunal, it transpires that there was a specific ground with regard to the disallowance of Rs. 10 lakhs in respect of fresh advances made in the year in question to the sister -concern by the appellant. In all, the loan granted to the sister -concern extended to the tune of Rs. 47,67,740.

(3.) THE AO was of the view that the basic information was not provided so as to arrive at a conclusion of the nexus between the advances and the assessee's overdraft and, therefore, adverse inference had to be drawn to the effect that the assessee had utilised interest -bearing loans to make the advances to the sister -concern and ultimately, considering this aspect, came to the conclusion that interest liability charged to the P&L a/c or to the like after taking a sum of Rs. 10 lakhs pertaining to this advance.