Whether The Tribunal Is Justified In Deletingthe Addition Of Rs.84,85,437/-, Being Interestaccrued On The Interest-Free Advances Madeby Assessee Whereas Assesse v. Commissioner Of Income Tax(C.a

-Court No. 3 Case :- INCOME TAX APPEAL No. - 83 of 2018 Appellant :- The Principal Commissioner Of Income Tax Allahabad And AnotherRespondent :- M/S Shervani Industrial Syndicate (P) Ltd.Counsel for Appellant :- Gaurav MahajanCounsel for Respondent :- Ashish Bansal Hon'ble Naheed Ara Moonis,J.Hon'ble Saumitra Dayal Singh,J. Heard Sri Gaurav Mahajan, learned counsel forthe petitioner and Sri Ashish Bansal, learnedcounsel for the assessee. The present appeal has been filed by therevenue against the order of Income TaxAppellate Tribunal Allahabad Bench, Allahabaddated 8.1.2018 in ITA No.262/Alld./2004 &164/Alld./2004, both for the A.Y. 1999-2000. The present appeal has been pressed on thefollowing questions of law: "1. Whether the Tribunal is justified in treatingthe receipt of 10 crore as 'non-compete fee'hence not liable to tax in A.Y. 1999-2000whereas it is noted that this financialtransaction has not been done under any 'non-compete agreement'. All the rights are givento assessee and there is no competition andassessee can do any business, therefore it is acolourable device ?" 2. Whether non-compete fee of Rs. 10 Crore is in the nature of capital receipt not chargeableto tax and the applicability of the provisions ofSection 28 (ii) and 29 of the Act ?" 3. Whether the Tribunal is justified in deletingthe addition of Rs.84,85,437/-, being interestaccrued on the interest-free advances madeby assessee whereas assessee claimedinterest on borrowed funds which were notutilized for the purpose of business?" As to the first two questions, it is claimed thatduring the A.Y. 1999-2000, (which is prior to1st April 2003), Section 28 (va) of the IncomeTax Act, 1961, would not apply. The law asenunciated by the three Judge Bench of theHon'ble Supreme Court in Gufc Chem. P.Ltd. Vs. Commissioner of Income Tax(C.A. No.2522 of 2011) {2011} 332 ITR602 (SC), would apply. Accordingly, question Nos.1 & 2 are answeredin the affirmative i.e. in favour of the assesseeand against the revenue. So far as, question no.3 is concerned, theTribunal has recorded categorical findings offact to the effect that the assessee hadsubstantial holding in six subsidiarycompanies. Second it held substantial amountin surplus. Third it advanced Rs.6,71,41,649/-to it's subsidiary companies under orderspassed by the Board of Industrial and Finance Reconstruction (BIFR in short), passed underthe provisions of Sick Industrial Companies(Special Provision) Act, 1985. There is nothingto doubt the correctness of those findings offact recorded by the Tribunal. The money paidby the assessee company is in compliance ofthe law. It cannot be said that the petitionerparted with the surplus fund by way ofdiversion. Therefore, the interest paid by thepetitioner on business fund borrowed for itsown use (and not for the utilization by itssubsidiaries) could not have been disallowed. Though learned counsel for the revenue hassubmitted that the fate of the appeal from theearlier order (on which the Tribunal has placedreliance), is not known, we are not inclined tokeep this appeal pending as the findingsrecorded by the Tribunal are clear andcategorical based on material before it. Therevenue has not raised any ground as toperversity. Accordingly, the third question as raised isconcluded by findings of fact recorded by theTribunal. The appeal lacks merit and is accordingly,dismissed. No order as to costs. Order Date :- 13.9.2021M. Tariq