1 itxa3630-09+1 sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.3630 OF 2009 AND INCOME TAX APPEAL NO.3631 OF 2009 The Commissioner of Income Tax ..Appellant. V/s. M/s. Bhojwani Investors & Developers Pvt. Ltd. ..Respondent. Mrs. Padma Divakar for appellant. Mr. J.D. Mistry, senior Advocate with P.C. Tripathi i/b. A.K. Jasani for respondent. CORAM : J.P. DEVADHAR AND R.M. SAVANT, JJ. DATED : 15TH NOVEMBER, 2010 P.C. :- 1. A short question raised in these two appeals is, whether the Tribunal was justified in deleting the additions on account of disallowance of interest made by the Assessing Officer on account of interest free advances to sister concern and related parties out of interest bearing borrowed funds. 2. The assessee had borrowed certain funds from Mr. Samir Bhowani, a Director of the assessee Company and advanced it to M/s. 2 itxa3630-09+1 Balkrishna Developers Pvt. Ltd. in 1995-96. Admittedly, the interest received from M/s. Balkrishna Developers Pvt. Ltd. from time to time has been offered to tax and interest paid on borrowed funds has been allowed as business expenditure. However, in AY 2002-03 and 2003-04 due to certain financial difficulties, M/s. Balkrishna Developers Pvt. Ltd. could not pay the interest and, therefore, the assessee took a commercial decision not to charge interest for these two assessment years. The Tribunal has recorded a finding of fact in para 5 of its order that the decision of the assessee to forgo the interest was a prudent business decision and in fact the said decision has enabled the assessee to recover the principle amount. In our opinion, the decision of the Tribunal does not give rise to any substantial question of law. Accordingly, both the appeals are dismissed with no order as to costs. (R.M. SAVANT, J.) (J.P. DEVADHAR, J.)