Commissioner Of Income Tax -1, Mumbai v. M/S. Rabo India Finances Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 6983 OF 2010 Commissioner of Income Tax -1, Mumbai ..... Appellant Vs. M/s. Rabo India Finances Ltd. ..... Respondent Mr.Vimal Gupta for the Appellant. Mr.Percy J.Pardiwala, Senior Advocate with Mr.Atul K.Jasani for the Respondent. CORAM : DR.D.Y.CHANDRACHUD &R.D. DHANUKA, JJ. DATE : APRIL 25, 2012 P.C.: This Appeal arises from a decision of the Income tax Appellate Tribunal dated 18 March 2010. The Assessment Year to which the appeal relates is A.Y.2004 – 05. The revenue has raised the following question of law : Whether on the facts and in the circumstances of the case and in law the Hon’ble Tribunal was justified in allowing exemption of interest of Rs.3,55,14,746/- received by the Assessee Company from Bharti Mobinet Ltd. and Energy Development Corporation u/s 10(23G) of the Income Tax Act . 2.The Assessing Officer sought to deny the benefit of the exemption under (i) The Assessee had not classified the loans which were granted to Bharti Mobinet Ltd. and Energy Development Corporation Ltd. as investment, but as loans and advances in its accounts; (ii)The Company to whom the loans were advanced had not invited open offers from the public for long term investment as infrastructure capital fund. Both, the CIT(A) and the Tribunal have noted that the claim of the Assessee to an exemption under Section 10 (23G) had been allowed from Assessment Year 2002-03 and was denied for the first time in Assessment Year 2004 – 05. That apart, as the Tribunal observed, the Assessee satisfied the conditions for claiming the exemption under Section 10 (23G) since it engages in long term financing and the entities to whom the loans were granted were also notified under the provision. The reasons on the basis of which the Assessing Officer denied the exemption, have no basis or foundation in the statutory provision, as noted by the Tribunal. Under the provisions of Section 10 (23G), it is inter alia provided that any income by way of interest from investment made in long term finance in any enterprise or undertaking which wholly engages in the business referred to in Section 80 IA (4) or Section 80 IB (3) or a housing project referred to in Section 80 IB (10) or a hotel project or a hospital project and which has been approved by the Central Government and which satisfied the prescribed conditions would be exempted. 3.Save and except for the said two grounds, there was no dispute that the other conditions which were fulfilled. Both, the CIT (A) and the Tribunal on a careful appraisal, have found that the conditions of Section 10 (23G) have been fulfilled. In that view of the matter, the Appeal will not raise any substantial question of law and is dismissed. No substantial question of law is raised. There shall be no order as to costs. DR.D.Y.CHANDRACHUD, J. R.D. DHANUKA, J.