Tax-Iii v. M/S.narang Hotel & Resorts Pvt. Ltd

(-1-) MGN IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LODG.) NO.846 OF 2004 The Commissioner of Income ) Tax-III )..APPELLANT Vs. M/s.Narang Hotel & Resorts Pvt. Ltd..RESPONDENT Mr.Suresh Kumar for the Appellant Ms.Shobhna Jagtiani with Mrs. Beena LPillai & Ravi Ratesar for Respondents. CORAM: F.I. R.S.MOHITE, JJ. DATED: 9th February, 2009 P.C.: P.C.: . Revenue has preferred this appeal on the following questions:- " (a) Whether on the facts and in the circumstances of the case and in law, the Hon’ble Tribunal is right in deleting the addition of Rs.13,50,000/- and Rs.27,530/- (-2-) being the interest disallowed on borrowed funds given out for non-business proposes in the form of interest free allowance to "sister concern" and another. (b) Whether on the facts and in the circumstances of the case and in law, the Hon’ble Tribunal is right in deleting the addition of Rs.11,34,773/- being the building repair expenses of the Madras unit. (c) Whether on the facts and in the circumstances of the case and in law, the Hon’ble Tribunal is right in allowing depreciation on revolving restaurant as plant and machinery ignoring the ratio of the Hon’ble Apex Court in the case of CIT vs. Anand Theatre reported in 244 ITR 182." 2. In so far as Question (a) is concerned, admittedly there is a finding of fact recorded that the assessee had its own surplus funds. That being the case in our opinion the issue is directly covered by the judgment dated 9th January, 2009 in Income Tax Appeal No.1398 of 2008 in the case of Commissioner of Income Tax-III vs. Reliance Utilities and Power Limited, wherein following the observations of the Supreme Court in East India East IndiaPharmaceutical Works Ltd. vs. Commissioner of Pharmaceutical Works Ltd. vs. Commissioner of (-3-) Income-Tax 224 ITR 627 (S.C.), we held that the Income-Tax 224 ITR 627 (S.C.) Income-Tax 224 ITR 627 (S.C.) principle that would be applicable would be that if there are funds available both interest free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investments. In the instant case also that presumption has been met considering the the findings recorded. . In so far as Question (b) is concerned, that is purely a finding of fact. Even otherwise we find that in respect of the assessment year 1985-86 the Revenue did not go in appeal against the order of the C.I.T. (Appeal). . In so far as Question (c) is concerned, the same is covered by our judgment in Commissioner of Commissioner of Income Tax vs. Narang Motels Pvt. Ltd., dated 19th Income Tax vs. Narang Motels Pvt. Ltd., dated 19thJanuary, 2009 in ITXA No.123 of 2006. January, 2009 in ITXA No.123 of 2006. . Appeal accordingly disposed of. (R.S.MOHITE, J.) (F.I.REBELLO, J.) (R.S.MOHITE, J.) (F.I.REBELLO, J.)