COMMISSIONER OF INCOME-TAX Vs. RAGHUVIR SYNTHETICS LTD

JUDGEMENT

(1.) To briefly state, the facts are that for the assessment year 2001-02, during the course of the assessment proceedings, it was noticed by the Assessing Officer that the company had incurred heavy interest expenses to the tune of Rs. 59,83,543 and, on the other hand, it had given interest-free loans to R.R. Family Trust (Kashiram Textiles Ltd.) to the tune of Rs. 1.05 crores and to Sagar Textile Mills to the tune of Rs. 18.40 crores. On calling for the explanation for interest-free loans and duly considering the submissions of both sides, the Assessing Officer disallowed the interest to the extent of Rs. 18,66,000 of the interest-free loans advanced to both the parties on the ground that the same was not incurred for business expenses. This decision of the Assessing Officer came to be challenged before the Commissioner of Income-tax (Appeals), which set aside the order of the Assessing Officer and deleted the addition of Rs. 18,66,000. It sought to rely on the precedent decision of the Appellate Tribunal given in the case of Torrent Financiers v. Asst. CIT, 2001 73 TTJ 624 . The Revenue challenged the same before the Income-tax Appellate Tribunal, which upheld the order of the Commissioner of Income-tax (Appeals). The impugned order came to be challenged in the present tax appeal proposing the following question of law which had been admitted earlier, vide order dated February 11, 2008, as substantial question of law for consideration of this court:

(2.) Though notice has been served to the respondent, no one has contested the same.

(3.) On hearing learned counsel, Mr. Manish Bhatt, and on closely examining the paper-book produced in this case, this appeal is decided.