Law:

Section:

Section 40A(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments - Assessment years 1990-91 and 1991-92 - During course of assessment proceedings for assessment years 1990-91 and 1991-92, Assessing Officer found that certain amounts were advanced by assessee-company without interest to a sister concern out of overdraft account with bank - Assessing Officer held that assessee had diverted its borrowed funds to its sister concern without charging any interest and accordingly disallowed proportionate interest relating to said amount out of total interest paid to bank - Commissioner (Appeals) allowed partial relief - Tribunal observing that amounts advanced by assessee to its sister concern had been advanced by utilising overdraft account and that on dates on which amounts were so advanced, there was no credit balance in bank account of assessee and assessee had not been able to explain purpose for which amount had been advanced to its sister concern without charging any interest, held that there was no material on record to show that assessee had derived any business benefit by advancing interest-free amounts to its sister concern and upheld disallowance - Whether no substantial question of law arose out of order of Tribunal for consideration by High Court - Held, yes Akshay Bhan for the Applicant. R.P. Sawhney and A.S. Tewatia for the Respondent. JUDGMENT N.K. Sud, J. - This order will dispose of four appeals, viz., I.T.A. Nos. 6, 7, 119 and 120 of 2003, involving common questions of law and fact. These appeals have been filed by the assessee-company against the order of the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"), dated June 20, 2002, for the assessment years 1990-91 and 1991-92. Although in the memorandum of appeals findings of the Tribunal on several issues have been questioned, but at the time of arguments counsel for the appellant confined his challenge to the finding whereby disallowance out of interest made by the Assessing Officer has been sustained. During the course of proceedings for the assessment year 1990-91, the Assessing Officer observed that the assessee had…

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