COMMISSIONER OF INCOME TAX Vs. SHRIRAM INVESTMENTS

JUDGEMENT

(1.) Revenue has filed this Appeal under Sec. 260-A of the Income Tax Act, in short, 'Act', aggrieved by the order passed by the learned Income Tax Appellate Tribunal, in short, 'Tribunal', Chennai 'B' Bench, dtd. 19/7/2018, passed in ITA No.995/CHNY/2017, allowing the Assessee's Appeal for Assessment Year 2013-2014, and setting aside the addition of alleged excessive interest paid by the Assessee, an Investment Company, to its Group Companies under Sec. 36 (1) (iii) of the Act.

(2.) The following Substantial Question of Law is proposed for consideration by this Court :

(3.) Mr.T.Ravikumar, learned Senior Standing Counsel for the Revenue, urged before us that the Assessing Authority as well as the Commissioner of Income Tax (Appeals) had rightly disallowed the claim of interest by the Assessee under Sec. 36 (1) of the Act, but the Tribunal has erred in deleting the said addition, as the Assessee had also borrowed sums from its Group Concerns and on the basis of 'Matching Principles', since lesser interest paid to the Group Concerns, it was contrary to the Agreement Clause (10) of one of the Deeds of Partnership, from whom such finance was taken, which provided for interest rate up to 12% per annum and, accordingly, the difference of interest paid and received by the Assessee should be added back under Sec. 36 (1) (iii) of the Act.