The Commissioner Of Income Tax-Vi v. M/S Century Textiles & Industries

IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.4218 OF 2009 The Commissioner of Income Tax-VI...Appellant.Mumbai Vs. M/s Century Textiles & Industries...Respondent.Ltd., Mumbai. Mr. Vimal Gupta, Advocate for Appellant.Mr. Pankaj R. Topani, Advocate for respondent. CORAM : J.P. DEVADHAR ANDSMT. R.P. SONDURBALDOTA, JJ. DATE : 21st June, 2011. P.C. 1. In this appeal, four questions of law raised by the revenue, which reads thus: (a)“Whether on the facts and in the circumstances of thecase, the Hon ble Tribunal was justified in law in’treating the project expenses amounting to Rs.15,31,365/- as revenue expenditure even though the same were connected to the new projects under completion and therefore capital in nature? (b)Whether on the facts and in the circumstances of the case, the Hon ble Tribunal was justified in law in’allowing legal expenses and professional charges amounting to Rs.1,53,001/- which are forming part of project expenses as revenue expenditure even though the same were of capital nature?case, the Hon ble Tribunal was justified in law in’allowing legal expenses and professional charges amounting to Rs.1,53,001/- which are forming part of project expenses as revenue expenditure even though the same were of capital nature? (c)Whether on the facts and in the circumstances of the case, the Hon ble Tribunal was justified in law in’deleting the dis-allowance of Rs.2,58,000/- on account of foreign travel expenses of Smt. S.D. Birla inspite of the fact that this expenditure was in no way connected with the business of the asesssee company?case, the Hon ble Tribunal was justified in law in’deleting the dis-allowance of Rs.2,58,000/- on account of foreign travel expenses of Smt. S.D. Birla inspite of the fact that this expenditure was in no way connected with the business of the asesssee company? (d)Whether on the facts and in the circumstances of the case, the Hon ble Tribunal was justified in law in’deleting the dis-allowance of interest to the extent of Rs.78,00,01,958/- made by the A.O. u/s 36(1)(3) of the I.T. Act in respect of new projects under construction.? ”case, the Hon ble Tribunal was justified in law in’deleting the dis-allowance of interest to the extent of Rs.78,00,01,958/- made by the A.O. u/s 36(1)(3) of the I.T. Act in respect of new projects under construction.? ” 2. As regards the first two questions are concerned, the finding of fact recorded by the Tribunal is that the said expenditure was incurred by the assessee related to the same line of business carried on by the assessee and therefore allowable as revenue expenditure. The expenditure incurred related to salary, conveyance, legal and professional charges, printing and stationery, fact recorded by the Tribunal is that the said expenditure was incurred by the assessee related to the same line of business carried on by the assessee and therefore allowable as revenue expenditure. The expenditure incurred related to salary, conveyance, legal and professional charges, printing and stationery, 3 ITXA : 4218/2009 which are revenue in nature. In this view of the matter, no fault can be found with the decision of the Tribunal in allowing the expenses as revenue expenditure. 3 ITXA : 4218/2009 which are revenue in nature. In this view of the matter, no fault can be found with the decision of the Tribunal in allowing the expenses as revenue expenditure. 3. As regards the third question is concerned, the Tribunal following its decision in the assessee s own case for earlier years has’allowed the claim of the assessee. As held by this court in the case of Commissioner of Income-Tax vs. Alfa Laval (I) Limited, reported in (2006) 282 I.T.R.445 (Bom.), the expenditure on foreign travel expenses of Director s wife may be allowed, depending on’the status of the parties, nature or character of the trade or venture, the purpose for which the expenses were incurred and the object sought to be achieved by incurring such expenses. In the present case, the I.T.A.T. after considering all facts on record has allowed the claim. Moreover, similar expenses allowed in the past have attained finality. In this view of the matter, in our opinion, question no.3 raised by the revenue cannot be entertained. 4. As regards the fourth question is concerned, the finding of fact recorded by the I.T.A.T. is that the monies were borrowed for the purpose of the business and utilised in the new Unit, which is yet recorded by the I.T.A.T. is that the monies were borrowed for the purpose of the business and utilised in the new Unit, which is yet 4 ITXA : 4218/2009 to commence the commercial operation, hence, the interest on borrowed funds is required to be allowed irrespective of the fact that assessee has capatilised the interest in its books of account. The Apex Court in the case of Deputy Commissioner of Income Tax vs. Core Health-Care Limited, reported in (2008) 298 ITR 194 SC, has allowed interest on borrowed capital utilised in relation to the business of assessee. In this view of the matter, we see no reason to interfere with question no.4 raised by the revenue. The appeal is accordingly dismissed. ( SMT. R.P. SONDURBALDOTA, J. ) (J.P. DEVADHAR, J.)