The Commissioner Of Income Tax-4 v. Maharashtra Glass & Agro Ltd

ASN IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 5204 OF 2010 The Commissioner of Income Tax-4.vs.Maharashtra Glass & Agro Ltd. ..Appellant. ..Respondent. Mr. Vimal Gupta, Sr. Advocate with Ms. Padma Divakar for the Appellant. Mr. Jitendra Jain with Atul K. Jasani for the Respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 4[th] December, 2012 PC: Three questions of law raised by the revenue in this appeal read thus: i)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in allowing expenses of Rs.1,66,06,382/- on account of lease rentals paid by assessee to ITC Bhadrachalam Finance & Investments Ltd. ignoring the fact that the same was not incurred wholly and exclusively for business purposes and was a transaction meant to enhance the loss returned hence not an allowable expenditure u/s. 37(1) of the Income Tax Act? ii)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in allowing expenses of Rs.1,66,06,382/- on account of lease rentals paid by assessee to ITC Bhadrachalam Finance & Investments Ltd. ignoring the admitted fact that the assessee has himself submitted that the said dis-allowance may be capitalized and treated as part of the cost of the asset in question? iii)Whether on the facts and circumstances of the case and in law, the ITAT was justified in allowing the expenses of Rs.50,00,000/- paid on account of consultancy charges to Directors as a compensation for loss of office by ignoring the fact that the necessary statutory approval of Govt. of India was not obtained by the assessee for the said payment? 2)As regards the first two questions are concerned, the finding of fact recorded by the Tribunal is that the transaction between the assessee and ITC Bhadrachalam Finance & Investments Ltd. was a genuine transaction and therefore, the lease rentals paid by the assessee were allowable as revenue expenditure. Since the decision of the Tribunal is based on finding of fact, we are not inclined to entertain the first two questions. 3)As regards the third question is concerned, it is not in dispute that the statutory approval sought from the Government of India for the said expenses is still pending. In any event even if the expenses in question are disallowed, it would not have any revenue implications, because admittedly, in the assessment year in question, there are losses to the extent of Rs.2.89 crores and admittedly the assessee has not claimed set off of the said losses in the subsequent assessment year. In this view of the matter, we are not inclined to entertain the third question. Accordingly, the appeal is dismissed with no order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)