Commissioner Of Income Tax, Mumbai City - 7 v. M/S.raptakos Brett & Co. Limited, Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2598 OF 2010 Commissioner of Income Tax, Mumbai City - 7, Versus M/s.Raptakos Brett & Co. Limited, Mumbai ..Appellant. ..Respondent. Mr.Suresh Kumar for the appellant.Mr.Sanjiv Shah for the respondent. CORAM : J.P. Devadhar & A.A. Sayed, JJ. P.C. : DATE : 29[th] July, 2011. 1.Three questions of law raised by the Revenue in this appeal reads thus : (A)Whether, on the facts and circumstances of the case, the Tribunal was right in law, in confirming the order passed by the CIT (A) wherein the CIT (A) allowed the gross dividend income on unit amounting to Rs.8,31,000/- without reducing the interest component of Rs.7,70,178/- under Section 80M of the Act ?was right in law, in confirming the order passed by the CIT (A) wherein the CIT (A) allowed the gross dividend income on unit amounting to Rs.8,31,000/- without reducing the interest component of Rs.7,70,178/- under Section 80M of the Act ? (B) Whether, on the facts and circumstances of the case, the Tribunal was right in law, in confirming the order passed by the CIT (A) wherein the CIT (A) allowed exemption of Rs.90,000/- under Section 10(15)(iv) of the Act over looking the provision of Section 57(iii) of the Act ?right in law, in confirming the order passed by the CIT (A) wherein the CIT (A) allowed exemption of Rs.90,000/- under Section 10(15)(iv) of the Act over looking the provision of Section 57(iii) of the Act ? (C) Whether, on the facts and circumstances of the case and in law, the view taken by the Tribunal is correct in law, in view of the judgment of the Karnataka High Court reported in 198 ITR 738, where the Hon'ble High Court took the view that where borrowed funds intermignle with view taken by the Tribunal is correct in law, in view of the judgment of the Karnataka High Court reported in 198 ITR 738, where the Hon'ble High Court took the view that where borrowed funds intermignle with assessee funds, interest could be disallowed even if no nexus is proved between borrowed fund and advance given ? 2.The finding of fact recorded by the Income Tax Appellate Tribunal in the present case is that the investment in units and tax free bonds were not made by the assessee during the current year, but were made in the earlier assessment years, wherein no disallowance of interest on borrowed funds have been made. It is further held that if no disallowance of interest on borrowed funds is made in the year in which the investments are made, then there is no reason as to why disallowance of interest on borrowed funds should be made in the assessment year in question. 3.In these circumstances, we see no reason to interfere with the order of the Tribunal. The appeal is accordingly dismissed with no order as to costs. (A.A. Sayed, J.) (J.P. Devadhar, J.)