The Commissioner Of Income Tax-2 v. The Bombay Dyeing & Manufacturing Co. Ltd

ASN IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.196 OF 2013 The Commissioner of Income Tax-2. v. The Bombay Dyeing & Manufacturing Co. Ltd. ..Appellant. ..Respondent. Mr. Suresh Kumar for the Appellant. Mr.S.I.Dastur, Sr. Advocate with Mr. Madhur Agarwal and Mr. A.K.Jasani for the Respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 18[th] March, 2013. PC: In this appeal by the revenue for assessment year 1992-93, following questions of law have been raised for our consideration. a) Whether on the facts and in the circumstances of the case the Tribunal was correct is not upholding the disallowance made by the Assessing Officer in respect of notional interest on interest free loans given to the subsidiary company when the Assessing Officer had already established the direct nexus between the borrowed funds and the loan? b)Whether on the facts and in the circumstances of the case the Tribunal was correct in law in setting aside the disallowance of notional interest amounting to Rs.1,97,417/- on advances made to sub subsidiary company and directing the Assessing Officer to decide the same in the light of the decision of Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd. 313 ITR 340 (Bom.) ignoring that the facts in the assessee's case are different from the said case as in that case no nexus between the borrowed funds and loan given to the subsidiary company was established by the Assessing Officer? c)Whether on the facts and in the circumstances of the case the Tribunal was correct in law in allowing the loss claimed to be incurred from the sale of tax free securities when the genuineness of the transaction could not be proved by the assessee? d)Whether on the facts and in the circumstances of the case the Tribunal was correct in law in allowing the loss incurred from the sale of tax free securities by following the decision of the Supreme Court in the case of CIT v. Wallfort Share & Stock Brokers Pvt. Ltd. 326 ITR-1 which would be applicable only in respect of genuine transactions? e)Whether on the facts and in the circumstances of the case the Tribunal was correct in law in not upholding the disallowance made by the A.O. In respect of notional interest expenditure incurred for earning dividend income exempt u/s.80M of the Income Tax Act when the Assessing Officer had already established the direct nexus between the borrowed funds and the loan? f)Whether on the facts and in the circumstances of the case the Tribunal was correct in setting aside the disallowance of ASN notional interest expenditure incurred for earning dividend income exempt u/s.80M of the Income Tax Act and directing the Assessing Officer to decide the issue in the light of the decision of Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd. 313 ITR 340 (Bom.) ignoring that the facts in the assessee's case are different from the said case as in that case no nexus between the borrowed funds and loan given to the subsidiary company was established by the Assessing Officer? g)Whether on the facts and in the circumstances of the case the Tribunal was correct in setting aside the issue of disallowance of notional interest on taxes paid out of borrowed funds, ignoring that the Assessing Officer had clearly established direct nexus between the borrowed funds and the taxes paid? 2) So far as questions (a), (b), (e), (f), and (g) are concerned, the Tribunal by impugned order has remanded the issue to the Assessing officer to decide the issue afresh in view of the decision of this court in CIT v. Reliance Utilities and Power Ltd. Reported in 313 ITR 340 (Bom.). The revenue has not pointed out as to why the decision in the matter of Reliance Utilities and Power Limited (supra) is inapplicable to the present facts. In that view of the matter, we see no reason to entertain 2) So far as questions (a), (b), (e), (f), and (g) are concerned, the Tribunal by impugned order has remanded the issue to the Assessing officer to decide the issue afresh in view of the decision of this court in CIT v. Reliance Utilities and Power Ltd. Reported in 313 ITR 340 (Bom.). The revenue has not pointed out as to why the decision in the matter of Reliance Utilities and Power Limited (supra) is inapplicable to the present facts. In that view of the matter, we see no reason to entertain ASN questions (a), (b), (e), (f) and (g). 3) So far as questions (c) and (d) are concerned, Counsel for the parties state that the issues herein are covered against the revenue and in favour of the assessee in view of the decision in the case of CIT v. Wallfort Share & Stock Brokers Pvt. Ltd. reported in 326 ITR 1. In that view of the matter, we see no reason to entertain questions (c) and (d). 4)Accordingly, the appeal is dismissed with no order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)