Itxa/452/2010 Of The Commissioner Of Income Tax-5, Mumbai v. M.s Essar Projects Ltd., Mumbai

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.452 OF 2010 The Commissioner of Income Tax-5, Mumbai ..Appellant. V/s. M/s. Essar Projects Ltd. ..Respondent. Ms. S.V. Bharucha i/b. Padma Divakar for the appellant. Mr. P.J. Pardiwala, senior Advocate with Atul K. Jasani for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATED : 28TH JANUARY, 2013 P.C. :- 1.In this appeal by the revenue for the assessment year 1998-99, the following questions of law are raised for our consideration:- a)The substantial question of law arises in the present appeal is regarding the true scope and correct interpretation of Section 36 and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law the Tribunal is right in allowing the guarantee commission of Rs.4,84,23,767/- regarding the true scope and correct interpretation of Section 36 and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law the Tribunal is right in allowing the guarantee commission of Rs.4,84,23,767/- as claimed by the assessee ? b)The second substantial question of law arises in the present appeal is regarding the true scope and correct interpretation of Section 43(2) and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law the Tribunal is right in dismissing the appeal of the revenue and allowing the loss on re-valuation of foreign currency ?appeal is regarding the true scope and correct interpretation of Section 43(2) and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law the Tribunal is right in dismissing the appeal of the revenue and allowing the loss on re-valuation of foreign currency ? c)The third substantial question of law arises in the present appeal is regarding the true scope and correct interpretation of Section 36(1)(iii) and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law, the Tribunal is right in allowing the interest paid on inter corporate deposits ?is regarding the true scope and correct interpretation of Section 36(1)(iii) and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law, the Tribunal is right in allowing the interest paid on inter corporate deposits ? d)The fourt substantial question of law arises in the present appeal is regarding the true scope and correct interpretation of Section 37 and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law, the tribunal is right in allowing the enhancement of lease rental of Rs.1,61,87,500/- as claimed by the assessee ?is regarding the true scope and correct interpretation of Section 37 and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law, the tribunal is right in allowing the enhancement of lease rental of Rs.1,61,87,500/- as claimed by the assessee ? 2.As regard question (a) is concerned, the Tribunal has followed the decision for the assessment year 1997-98. Counsel for the parties state that the revenue's appeal with regard to the assessment year 1997-98 has been dismissed by this Court on account of non removal of office objections and an S.L.P. before the Apex Court is pending. Since the Tribunal has followed the earlier year assessment order and the appeal against it stands dismissed, we see no reason to entertain question (a). 3.So far as question (b) is concerned, the Tribunal has relied upon the decision of this Court in the matter of Padamjee Pulp & Paper Mills Ltd. V/s. CIT reported in 210 ITR 97. In view of the above, we find no fault in the order of the Tribunal and, therefore, see no reason to entertain the proposed question of law. Apex Court is pending. Since the Tribunal has followed the earlier year assessment order and the appeal against it stands dismissed, we see no reason to entertain question (a). 3.So far as question (b) is concerned, the Tribunal has relied upon the decision of this Court in the matter of Padamjee Pulp & Paper Mills Ltd. V/s. CIT reported in 210 ITR 97. In view of the above, we find no fault in the order of the Tribunal and, therefore, see no reason to entertain the proposed question of law. 4.So far as question (c) is concerned, the Tribunal in the impugned order has upheld the finding of fact recorded by the CIT(A) that the borrowed funds on which interest has been paid was made for the purpose of business and consequently, the respondent-assessee's claim u/s.36(1)(iii) of the Act is correctly allowed. As the decision of the Tribunal upholding the order of CIT(A) is based on a finding of fact, we see no reason to entertain the proposed question of law. 5.So far as question (d) is concerned, the finding of fact recorded by the Tribunal is that the variation in the lease rental was made on account of increase in the lease deposit. This variation was held to be based on commercial consideration. Thus, the conclusion of the CIT(A) in that regard was upheld. In these circumstances, question (d) as formulated is not being entertained. Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)