Itxa/1317/2016 Of Pr. Commissioner Of Income Tax-1 v. M/S. Killick Nixon Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1317 OF 2016 Pr. Commissioner of Income Tax-1 .. Appellant v/s. M/s. Killick Nixon Ltd... Respondent Mr. Suresh Kumar for the appellant None for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 4[th] FEBRUARY, 2019 1.The Revenue is in appeal against the judgment of the Income TaxAppellate Tribunal ("the Tribunal" for short) raising following questionfor our consideration : - “(i) Whether on the facts and in the circumstances of the caseand in law, the Tribunal is justified in holding that the assesseehas incurred business loss on account of guarantee extended inthe ordinary course of business? 2.The respondent assessee is a limited company, filed its return of income for Assessment Year 2001-02. The Assessing Officer noted aclaim of business loss arising out of the assessee's activity of providing corporate guarantee. The Revenue's contention was that the loss wasnot suffered in the course of assessee's ordinary business activity andtherefore, cannot be claimed as a business loss. 3.After one round of remand, the Tribunal examined the materialon record and in particular Memorandum and Articles of Association ofthe assessee company to come to the conclusion that the said Articles ofAssociation permitted the assessee company to engage in activity ofproviding corporate guarantees in favour of other persons and entities.It was pursuant to this Article of Association that the assessee hadengaged itself in such activity, providing corporate guarantee for creditfacilities sanctioned by Vysya Bank to one Geekay Exim (India) Pvt. Ltd.& Ors. In the process, the assessee had incurred loss. The assesseehad also taken reasonable steps for making recoveries by filing civilsuits. Thus, on facts, the Tribunal hold in favour of the assessee onboth counts namely; that the loss was genuine and that it arose out ofthe assessee's normal business activities. 4.We do not find any error in view taken by the Tribunal. Noquestion of law arises. 5.The tax appeal is dismissed. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)