2019 (3) TMI 1112

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....stions for our consideration:- "(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in restricting the exemption u/s. 10(23G) at Rs. 8,58,00,484/- being the gross interest receipt as against at Rs. 6,70,94,603/- being the interest income without appreciating the fact that it cannot be allowed on gross basis and that the cost of interest on fund borrowed for funding its client should be reduced thereby to allow the exemption on net basis only? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the exemption claimed at Rs. 22,96,96,605/- u/s. 10(33) of the I.T. Act without appreciating the fact that what is exempt u/s. 10(33) ....

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....the assessee had raised foreign loan from which infrastructure projects were funded. The exempt income was reduced by interest expenditure, however, the same treatment was not given in respect to the local borrowings. The Assessing Officer, therefore, worked out the disallowance of exempt income by adjusting interest expenditure on local borrowings. 5. The Tribunal by the impugned judgment, deleted such disallowance primarily on the ground that the assessee had sufficient interest free funds. The Tribunal relied upon and referred to the judgment of this Court in the case of CIT Vs. Reliance Utilities and Power Ltd. [2009] 313 ITR 340 (Bom) in this respect.   6. Having heard the learned counsel for the parties on this issue, we....

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....cision of this Court in case of Reliance Utilities & Power Ltd (supra) was carried in the appeal by the Revenue. The Supreme Court by a judgment dated 2.1.2019, has confirmed the decision of this Court. We further notice that the Revenue had not been able to establish any direct co-relation between the assessee's local borrowings and its investments in infrastructure development projects. For such reasons, no question of law arises. Hence, this question is not entertained. 8. Question No. (ii) relates to the assessee's claim of exemption under Section 10(33) of the Act. In this case also, the Tribunal relying on the same principle as in the previous question and applying the decision of this Court in the case of Reliance Utilitie....