The Commissioner Of Income Tax-2,Mumbai v. Raymond Ltd

srk IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.187 OF 2011 The Commissioner of Income Tax-2,Mumbai ...Appellant Versus Raymond Ltd. ...Respondent Mr.Vimal Gupta for appellant. Mr.Percy J. Pardiwala, Senior Advocate with Mr.Mohan Salian, Ms.Vaijayanta Shete and Mr.Jainuddin Khan i/b. Gagrats for respondents. CORAM: DR.D.Y. CHANDRACHUD & M.S.SANKLECHA, JJ. March 21, 2012. P.C. 1.This appeal by the Revenue arises from a decision of the Income Tax Appellate Tribunal dated 22 March 2007; the Assessment Year to which appeal relates being AY 1996-97. The following substantial questions of law are raised (A)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the increase in disallowance under Rule 6D made by the A.O.; (B)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting disallowance of pre-operative expenses even though the said expenditure pertains to establishment of steel division and is capital in nature; (C)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in allowing deduction of payment in respect of technical know-how under Section 37 while holding Section 35AB is not applicable; (D)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in allowing deduction in respect of interest of Rs.3,98,75,958/- payable on funds borrowed despite it being a capital expenditure; (E)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in allowing expenses on electricity and water charges in respect of the property owned by assessee company given to Directors for residential purpose and holding only perquisites value can be assessed in the hands of the Directors; (F) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in allowing the actual premium paid in redemption of debentures as revenue expenditure; (G) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in allowing the disallowance made by AO of the cash payment under Section 40A(3); (H) Whether on the facts and in the circumstances of the case and in law, the ITAT is right in deleting the addition on valuation of inventory made by the AO? Whether on the facts and in the circumstances of the 2.Counsel appearing on behalf of the Revenue and the counsel appearing on behalf of the assessee are agreed that questions (A) to (D) would stand covered in favour of the assessee and against the Revenue for the following reasons: 1. Questions (A) and (B) are covered by the judgment rendered on 20 March 2011 by this Court in relation to the assessee for Assessment Year 1990-91 in Income Tax Appeal No.189 of 2011.March 2011 by this Court in relation to the assessee for Assessment Year 1990-91 in Income Tax Appeal No.189 of 2011. 2. Question (C) is governed by the decision rendered on 20 March 2012 by this Court in relation to the assessee in Income Tax Appeal No.1357 of 2009 for Assessment Year 1994-95.2012 by this Court in relation to the assessee in Income Tax Appeal No.1357 of 2009 for Assessment Year 1994-95. 3. Question (D) stands covered in favour of the assessee by the judgment of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1]judgment of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1] 3.Question (E) does not arise from the order of the Tribunal. 4.As regards question (F), it is common ground between the counsel appearing on behalf of the Revenue and the counsel appearing on behalf of the assessee that it was the assessee who was in appeal before the Tribunal from the order of CIT(A). Hence, no substantial question of law can arise at the behest of the Revenue from the decision of the Tribunal. 3. Question (D) stands covered in favour of the assessee by the judgment of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1]judgment of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1] 3.Question (E) does not arise from the order of the Tribunal. 4.As regards question (F), it is common ground between the counsel appearing on behalf of the Revenue and the counsel appearing on behalf of the assessee that it was the assessee who was in appeal before the Tribunal from the order of CIT(A). Hence, no substantial question of law can arise at the behest of the Revenue from the decision of the Tribunal. 5.As regards question (G), the Tribunal in paragraph 121 of its decision has noted that the disallowance of Rs.67,154/- which pertained to the purchase of aviation fuel and diesel and for payments made to Embassy of Qatar was correctly deleted by CIT(A). The assessee established exceptional circumstances within the meaning of Rule 6DD(j), since the payments were made for business consideration and on account of unavoidable circumstances. No substantial question of law would arise therefrom. 6.The appeal is admitted on question (H) and is taken up for final hearing by consent. 7.Counsel appearing on behalf of the Revenue and the counsel appearing on behalf of the assessee are agreed that in terms of the 1 . [2008] 298 ITR 194 (SC) decision rendered by this Court in Income Tax Appeal No.189 of 2011 on 20 March 2011 for Assessment Year 1990-91, this ground would have to be restored to the Tribunal for fresh decision. It is ordered accordingly. Consequently, it is not necessary for the Court to answer the question of law as framed. 8.The Appeal shall stand disposed of in these terms. There shall be no order as to costs. (DR.D.Y. CHANDRACHUD,J.) (M.S.SANKLECHA, J.)