The Cit v. M/S.paradise Multimedia Ltd

( 1 ) IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.964 OF 2008 INCOME TAX APPEAL NO.964 OF 2008 The CIT .. Appellant Vs. M/s.Paradise Multimedia Ltd. .. Respondent Mr.S.C.Tiwari for the Appellant. Mr.R.Asokan for the Respondent. CORAM :- DR.S.RADHAKRISHNAN & S.J.KATHAWALLA, JJ. CORAM :- DR.S.RADHAKRISHNAN & S.J.KATHAWALLA, JJ. DATE : 25th September, 2008 DATE : 25th September, 2008 P.C. P.C. 1. Heard the learned Counsel for the parties. In this Appeal, the Appellant is seeking to raise the following two substantial questions of law:- (a) The substantial question of law arises in the present appeal is regarding the true scope and correct interpretation of Sec.2 (22) (e) and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law the Hon’ble Tribunal was right in deleting the addition of Rs.61,00,000/- made by the A.O.being the deemed divident received from its sister concern M/s.Big Vision Pvt.Ltd. (b) The second substantial question of law arises in the present appeal is regarding the true scope and correct interpretation of Sec.43(B) and other provisions of the Income Tax Act, 1961 and whether on the facts and circumstances of the case and in law the Hon’ble Tribunal was right in upholding the order of the C.I.T.(A) and deleting the disallowance of interest of Rs.46,42,540/- which was not paid to M/s.Abhyudaya Co-op.Bank Ltd. being the interest on term loan outstanding with the bank. 2. Perused an order of the Income Tax Appellate Tribunal dated 31st October, 2007. So far as the first question of law raised in this Appeal is concerned, the ( 2 ) Tribunal has considered the said issue in Paragraph Nos.4 to 7 of its order. It is vital to note here that in fact M/s.Big Vision Pvt.Ltd. which is an incorporated Private Limited Company does not hold any share in the Assessee Company and therefore the question of applying Section 2(22) (e) of the Income Tax Act becomes questionable. In Paragraph No.6 of the order the Tribunal has quoted the relevant part of the observations of the CIT (A), whereby the CIT(A) has clearly held that in the absence of any cogent material brought on record by the Assessing Officer, he is not justified in treating the amount as income under Section 2(22) (e) of the Act or for that matter charging the same as income from other sources on presumption that the amount was received as hire charges against the machineries letting, merely for the reason that the agreement for lease did not contain the deposit clause. It appears that no hire charges were ever levied and the amount of Rs.61 lakhs was adjusted towards the job work and goods supplied. The CIT (A) has also observed that the amount received by the Appellant Company could not be equated with the loans and advances even on alternative assumption it could be related that the amount was to be received on account of normal business transactions. 3. With regard to the second question of law the Tribunal in its order in paragraph Nos. 8 to 12 has ( 3 ) considered the said issue in depth. In paragraph No.11 the Tribunal has quoted the obvervations of the CIT (A). The CIT (A) has held that - ".....Further it is not a case where the said banker had at any time remitted the interest of the appellant company to suggest that the amount was not credited against interest. In view of the fact that the appellant had paid Rs.89 lakhs after interest being charged against its loan balance outstanding. Thus considering the fact that it was merely on technical term the interest was said to be unpaid as capital amount was to be received on account of normal business transactions. 3. With regard to the second question of law the Tribunal in its order in paragraph Nos. 8 to 12 has ( 3 ) considered the said issue in depth. In paragraph No.11 the Tribunal has quoted the obvervations of the CIT (A). The CIT (A) has held that - ".....Further it is not a case where the said banker had at any time remitted the interest of the appellant company to suggest that the amount was not credited against interest. In view of the fact that the appellant had paid Rs.89 lakhs after interest being charged against its loan balance outstanding. Thus considering the fact that it was merely on technical term the interest was said to be unpaid as capital balance outstanding it is not a case that the appellant had in fact not paid the interest to the bank." 4. Thus considering the totality of facts the Tribunal came to the conclusion that whatever amount was paid has to adjusted towards interest, and it was not controverted by the revenue. The Tribunal did not find any infirmity in the order of the learned CIT (A) deleting the disallowance made under Section 43B of the Act. The Tribunal concurred with the findings of facts given by the CIT (A). 5. We do not find any substantial question of law arising in the present Appeal. Hence the Appeal stands dismissed. (S.J.KATHAWALLA, J.) (DR.S.RADHAKRISHNAN,J.)