TaxTMI 
TaxTMI 
2014 (10) TMI 252
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....ment year 2000-01. The Revenue has claimed the following substantial questions of law : '(i) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in deleting of dis- allowance of Rs. 1,42,52,223 made on account of interest relatable to investment in capital work-in-progress ignoring Explanation 8 to section 43(1) of the Income-tax Act, 1961, which requires the interest on borrowed capital to be treated as capital expenditure ? (ii) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in deleting of dis- allowance of interest amounting to Rs. 87,80,214 made under section 36(1)(iii) ? (iii) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer to compute the relief under section 80HHC without reducing the deduction eligible under section 80-IA/ 80-IB disregarding the prov....
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...., the following order was passed : "1. This is an application seeking review of our order dated May 12, 2010, in respect of questions Nos. i, ii, v and iv. 2. Notice of the application has been issued. 3. Mr. Sandeep Goyal, learned counsel for the non-applicant- respondent has put in appearance on behalf of the respondent. The prayer made in the application has been opposed by filing reply to the review application. 4. After hearing learned counsel for the parties, we are of the view that there are sufficient grounds for accepting the review application in respect of questions Nos. i, ii, v and iv. 5. Mr. Dinesh Goyal, learned counsel for the review applicant, has pointed out various objections made in the order of the Tribunal, which shows to the contrary. Those paragraphs have also been cited in the review application. There is no serious dispute with regard to the aforesaid factual position.  ....
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....er of Income-tax (Appeals) partly allowed the appeal. Not satisfied with the order, the respondent filed appeal before the Tribunal. Vide order dated March 23, 2007, annexure A.3, the Tribunal partly allowed the appeal. Hence the present appeal by the Revenue. 6. We have heard learned counsel for the parties and perused the records. Re : Question (i) 7. The issue herein relates to whether the interest paid which was relatable to investment in capital work-in-progress was to be allowed or not. The apex court in Deputy CIT v. Core Health Care Ltd. [2008] 298 ITR 194 (SC) had held that the provisions of Explanation 8 to section 43(1) of the Act has no relevance in respect of section 36(1)(iii) of the Act. It has also been held that the proviso to section 36(1)(iii) of the Act inserted by the Finance Act, 2003, with effect from April 1, 2004, is only prospective and would not apply to the earlier assessment years. In view of the aforesaid judgment, the Tribunal has rightly decided the issue in favour of the assessee and against the Revenue. Question No. (i) is, thus, answered against the Revenue and in favour of the assessee. Re : Question (ii) 8. Adverting to question No. (ii), ....
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....e assessee to submit the impugned evidence that the cost of funds was much below 18.5 per cent. assured by the Assessing Officer. Therefore, in our view, the aforesaid evidence ought to have been considered by the Commissioner of Income-tax (Appeals). 19. In terms of the facts and material available on record, it is abun- dantly clear that the plea of the Assessing Officer that the assessee has incurred the expenditure on funds utilised for advancing loan to sister concerns higher than the amount of interest received from sister con- cern is not tenable. Therefore, the invoking of section 36(1)(iii) in the instant case, although justified in principle would not result in any dis- allowance in the hands of the assessee. This is for the reason that the assessee has charged interest on loans to sister concern not below the interest paid on the funds utilized for the said purpose." 9. A perusal of the aforesaid shows that the Tribunal had come to the con- clusion on the basis of the material on record that the assessee had charged interest on loans to its sister concern not below the interest paid on the funds utilized for the said purpose as the plea of the assessee was that it had ....
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....anufacturer in con- vertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf. Explanation.-For the purpose of this clause, the expression 'competent authority' means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealing in foreign exchange.' Sub-section (2)(a) prescribes that the sale proceeds of goods for merchandise exported out of India should be received or brought into India by the assessee within a period of six months from the end of the previous year or within such further period as the competent may allow in this behalf. It is further provided that the competent autho- rity means the Reserve Bank of India or any such other authority as is authorised for regulating payments and dealings in foreign exchange. Evidently the assessee had outstanding export invoices even beyond six months from the end of the previous year in question. Such unre- alised exports invoices were, therefore, liable to be excluded from the export turnover for the purposes of computing....