M/S. Unique Pharmaceuticals Laboratories Limited v. Dy. Commissioner Of Income Tax, Special Range-3-,Bombay

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORIGINAL SIDE INCOME TAX APPEAL NO. 828 OF 2002 M/s. Unique Pharmaceuticals LaboratoriesLimited vs. Dy. Commissioner of IncomeTax, Special Range-3-,Bombay. Appellant Respondent Mr.A.K.Jesani i/b. Mr.K. Gopal for the appellant. Ms.S.V. Bharucha Mr.Pankaj Kapur for the respondent. CORAM: R. M. LODHA & J.P.DEVADHAR,JJ. DATED: 15th September 2004 P.C. Heard. 2. The Tribunal in the impugned order observed thus: "On a query raised by the Assessing Officer,no attempt was made by the assessee toestablish that interest bearing borrowals werenot utilised for giving interest free advancesto its employees. What was stated before theAssessing Officer was that the amounts arevery meager, compared to the turnover andsalary bill and that the practice of grantinginterest free loans to the staff members hadsalutary effect on the staff and they feelthat the management is at their back. Thesame explanation was reiterated, though indifferent words, stating that interest freeadvance was given to the workers to maintaincordial relations with them. The RevenueAuthorities have recorded the finding that nobusiness purpose has been served by advancingthe interest bearing funds to the employeesfree of interest. This finding could not beassailed by bringing on record evidence toprove the contrary. If part of the interestbearing borrowed funds have been utilised fornon business purposes and the RevenueAuthorities record a finding to that effectwhich finding remains uncontroverted, impugneddisallowance has to be sustained. As rightly contended by the learned DepartmentalRepresentative that it was never pleadedbefore the Revenue authorities that interestfree advance to the employees were given outof reserve and surplus. Therefore, this newplea cannot be entertained."3. The consideration of the matter by the Tribunal doesnot suffer from legal infirmity.4. No substantial question of law arises.5. The judgment cited by the learned counsel for theappellant in the case of V.M. Salgaoncar & Bros.Pvt. Ltd. vs. Commissioner of Income Tax, 243 ITR 383 has no application to the facts of the present case. 6. Dismissed in limine. (R.M. LODHA, J.)(J.P. DEVADHAR,J.)