The Commissioner Of Income Tax-14 Mumbai v. M/S. Sagar Overseas

IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.525 OF 2008 The Commissioner of Income Tax-14MumbaiVs.M/s. Sagar Overseas ..Appellant. ..Respondent. ...... Mr. D.K. Kamwal for the Appellant.None for the Respondent. .....CORAM : DR.D.Y.CHANDRACHUD & J.P.DEVADHAR, JJ. 7 June 2010. P.C. : The appeal has been admitted on 8 September 2008 on the following substantial question of law : “Whether on the facts and in the circumstances of the case, the ITAT’s decision in directing the A.O. to treat interest income of Rs.16,67,682/- as ‘Income from Business’ relying upon the decisions of the ITAT Special Bench, Delhi in the case of Lalson Enterprises is right ignoring the decisions of the S.C. and of the Kerala High Court mentions herein;” The assessee has been served and an affidavit of service has been filed. None appears for the assessee. We have perused the order passed by the Assessing Officer and the appellate orders by the Commissioner (Appeals) and by the Tribunal. Neither of the aforesaid orders has considered the purpose for which the bank guarantee in question was obtained by the assessee. It is not clear from the impugned orders as to whether the bank guarantee was obtained for the purpose of the acquisition of a capital asset or for the purpose of business. In the circumstances, we consider it appropriate and proper to remit the proceedings back to the Tribunal for a fresh decision on the aforesaid question only. To facilitate the passing of a fresh order on remand, we set aside the impugned order of the Tribunal dated 30 March 2007 in respect of the aforesaid ground. The appeal is accordingly allowed in the aforesaid terms. There shall be no order as to costs. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)