Itxa/1135/2012 Of The Commissioner Of Income Tax Central -Iii v. M/S. Virtuous Finance Ltd

sbw IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1135 OF 2012 The Commissioner of Income Tax,Central-III ..Appellant -Versus-M/s. Virtuous Finance Ltd. ..Respondent ........... Mr. Arvind Pinto for the Appellant.Mr. P. J. Pardiwalla, Senior Advocate, i/b. Atul K. Jasani for the Respondent. ........... CORAM: S.C. DHARMADHIKARIAND A. A. SAYED, JJ. DATE :- 30[th] OCTOBER, 2014 P.C.: This Appeal challenges the order passed by the Tribunal on 31[st ] March, 2011 in a batch of Appeals. The assessment year in this case is 2001-02. There are four questions and termed as substantial questions of law. They are formulated at page 4 and 5 of the paper book. They read as under:- “(A) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition of Rs.32,88,615/- made by the Assessing Officer out of interest claimed by the Assessee Company on funds borrowed from related concerns even though the Assessee Company on funds borrowed from related concerns even though the Assessee Company had advanced interest free funds and could not prove that the amounts borrowed on which interest paid was claimed were not used by the Assessee Company to advance interest free funds? (B) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that interest income of Rs.13,69,134/- had not accrued to the Assessee Company even though the Assessee Company was following the mercantile system of accounting? (C) Whether, on facts and in the circumstances of the case and in law, ITAT was erred in directing the Assessing Officer to recompute disallowance under section 14A as per the decision of High Court in the case of Godrej and Boyce Manufacturing Private Limited 328 ITR 81 when department has not accepted the decision and had filed special leave petition before Supreme Court? (D) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the provisions of section 234D of the Income Tax Act could not be applied retrospectively for Assessment Years prior to assessment year 2004-05 even though the Assessment Order under section 143(3) of the Income Tax Act for Assessment Year 2001-02 was framed after 01.06.2003?” 2]As far as question (A) and (B) are concerned, we have, today, dismissed the Revenue's Appeal raising identical questions and challenging *3* the same order of the Tribunal dated 31[st] March, 2011. That order was in the case of the same Assessee. In such circumstances, questions (A) and (B) cannot be termed as substantial questions of law. As far as question (C) and (D) are concerned, that are covered against the Revenue and in favour of the Assessee by the judgment of this Court in the case of Godrej & Boyce Manufacturing Co.Ltd. reported in 328 ITR 81. 3]On question No.(D), Mr. Pardiwalla, learned Senior Counsel, appearing on behalf of the Assessee, fairly brought to our notice a Division Bench judgment of this Court in Income Tax Appeal No.2012 of 2011 decided on 12[th] September, 2012 (The Commissioner of Income Tax-10, Mumbai V/s. Indian Oil Corporation Ltd.). 4]Question (D) is, thus, substantial question of law. The Appeal is admitted on that question and by consent of parties, the same is allowed partially. Meaning thereby, question (D) is answered in favour of the Revenue. Following a Division Bench judgment in Indian Oil Corporation Ltd. (supra), the order of the Tribunal is set aside to that extent. The Appeal succeeds in part. No orders as to costs. (A. A. SAYED, J.) (S.C. DHARMADHIKARI, J.) wadhwa 3/3