TaxTMI 
TaxTMI 
2012 (12) TMI 1185
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....rt) dated 01-12-2010, partly allowing the assessee's appeals contesting its assessments u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the relevant years. The appeals raising common issues, were taken up together for hearing, and are being disposed of vide a common, consolidated order. 2. At the outset it was observed by the Bench that the assessee's appeals are belated by a period of 36 days each. The same are accompanied by an application for condonation of delay, duly supported by an affidavit. Its stands averred therein that the concerned executive, handling the matters, proceeded on leave, and subsequently left the organization. Hence, the delay. The Revenue did not seriously dispute the same or raise any object....
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....bove funds have been utilized as under: a. Purchase of fixed assets 21,672.22 b. Purchase of investments 8,483.53 c. Loans and investments in subsidiary incl int 757.95 d. Preoperative expenses 811.04 e. Repayment of short term borrowings 17,959.25 49,683.99 Net deficit for the year 17.85 [(*) wrongly typed as '47,666.15' in the appellate order] Further details were called for. The borrowing of Rs. 35 crores was in fact assumed at Rs. 65 crores in the form of Inter Corporate Deposits (ICDs) from Bennett Coleman & Co. Ltd. (BCCL) @ 8% p.a., of which Rs. 30 crores was paid on 15-02- 2006. The total interest liability on this account amounted to Rs. 67.86 lakhs. In additi....
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....al license fee as well as interest for the delayed period @ 8% p.a. The ld. CIT(A) was of the view that this payment could not be regarded as penal in nature, but only as compensatory toward depriving the use of funds to the Govt. of India for the period of delay. No disallowance in its respect would thus arise. As regards interest on loan of Rs. 35 crores, it was clear that the same was utilized for loans and advances to sister concern as also investment in tax-exempt securities, which had witnessed an increase of Rs. 24.6 Crores during the year. A proportionate disallowance was, thus, called for. 3. Before us, while the Revenue disputes the relief in respect of interest paid to MIB (Rs. 191.39 lakhs), the assessee challenges the propor....
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....disallowed in its appeal memo (Rs. 259,25,610/-), even as it has been allowed relief to a substantial extent thereof by the first appellate authority. 4.2 On merits, we may, to begin with, examine the assessee's cash flow statement for the year. The total cash inflow is at Rs. 49,666.15 lakhs. Excluding the shortterm borrowings and its repayment (Rs. 177 lakhs) from both the sides; the same having been re-paid during the year itself in full, as well as netting the movement of funds in 'investments' (on their purchase and sale during the year), as well as the financing cost, the same would be as under:- A. Source of funds: (Rs in lakhs) Remarks a. Cash in flow from operating activities 2,2....
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....gures afore-mentioned would have be substituted by average figures for the year - Rs. 30 crores, entailing an interest payment of Rs. 28.23 lacs, having been repaid during the year), it would suffice to say that the same shall scale down the extent of disallowance, i.e., assuming so, to around 10% of the interest thereon (Rs. 67.86 lakhs). We state so only to emphasize the un-tenability of the Revenue's case on the very face of the cash flow statement, even as there is no case for disallowance inasmuch as there can be no presumption that the borrowed interest bearing funds are utilized for which purpose. The only exception would be in case of dedicated funds or borrowings, which have to be or are required to be expended toward the stated pu....
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....rowed capital was utilized (for a given period) to pay the same, being only a business purpose, as is a payment of license fee itself. The payment, in any case, is compensatory in character. The Revenue's only case, rather, could be that interest, corresponding to the period for which the radio stations were not operative and under installation, be capitalized, as itself done by the assessee for a part of interest paid during the year. No case for a disallowance would arise unless the Revenue shows the payment to be not for business purpose or for any infraction of law, in which case the entire of it, and not the interest incurred on the corresponding borrowings (where so), would stand to be disallowed, and as in fact stands done by the Rev....