Commissioner Of Income Tax (Central), Ludhiana v. M/S Steel Strips Limited

Income Tax Appeal No.209 of 2001Date of Decision:07-01-2009 Commissioner of Income Tax (Central), Ludhiana ---Appellant versus M/s Steel Strips Limited ---Respondent Coram:HON'BLE MR. JUSTICE J.S.KHEHARHON'BLE MR. JUSTICE NAWAB SINGH Present:Ms. Urvashi Dhugga, Advocate,for the appellant.Mr.Akshay Bhan, Advocate,for the respondent. J.S.Khehar, J.(Oral) During the course of hearing learned counsel for the rivalparties are agreed that the deduction available to an assessee underSection 36 (1)(iii) of the Income Tax Act, 1961 in respect of the interestcomponent on capital borrowed is to be determined in consonance withthe judgment rendered by the Apex Court in S.A. Builders Ltd. vs.Commissioner of Income-Tax (Appeals) and another(2007) 288 ITR 1so as to determine the commercial expediency of the assessee, inextending interest free loan. Since the needful had not been done by theAssessing Officer, as also, the Appellate Authorities, learned counsel forthe parties are agreed that the orders passed by the Assessing Officer aswell as the Appellate Authorities be set aside. Ordered accordingly. Learned counsel for the parties are also agreed that theadjudication of the present controversy be remanded back to the Income Tax Appellate Tribunal, Chandigarh, requiring it to re-adjudicate the issuewhether the respondent - assessee is entitled to deduction under Section36(1)(iii) of the Income Tax Act, 1961, on the interest component in respectof capital borrowed, based on the parameters laid down inS.A.BuildersLtd.'s case(supra), and while doing so, to grant liberty to the rival partiesto lead evidence, if they so desire. Accepting the submissions advanced by learned counsel forthe parties, the matter is remanded to the Income Tax Appellate Tribunal,Chandigarh. The parties are directed to appear before the Income TaxAppellate Tribunal, Chandigarh on 2.2.2009. In the aforesaid circumstances, the instant appeal is allowed.The impugned orders are set aside to the limited extent of determination ofdeduction claimed by the respondent-assessee under Section 36(1)(iii) ofthe Income Tax Act, 1961. (J.S.KHEHAR)JUDGE (NAWAB SINGH)JUDGE January 07, 2009PARAMJIT