2020 (1) TMI 406

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....ted 27.06.2008 for the Assessment Year 2004-05. The present appeal was admitted by the Coordinate Bench of this Court on 18.03.2009 on the following substantial questions of law: "(i) Whether on the facts and circumstances of the case, the Tribunal was right in holding that the reopening of the assessment was illegal? (ii) Whether in the facts and circumstances of the case, the Tribunal was right in holding that the license fee paid by the assessee to RPGE, Bombay for the A.Y.96-97, 98-99 and 99-00 are nothing but expenditure incurred wholly and exclusively for the purpose of business? (iii) Whether, in the facts and circumstances of the case, the Tribunal was right in allowing the claim of interest on borrowed fu....

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....ade in the form of shares. It may be true that the returns are not commensurate with the expected returns in the form of interest, but if and when, the shares are liquidated, there is expectancy of substantial gains which fact has been glossed over by the Assessing Officer while confining his findings that the returns are far below the quantum of interest paid on the borrowed funds and, therefore, the basis of analysing that the payment of interest on borrowed funds has to be tested on the ground of quantum of return is untenable. Furthermore, as rightly pointed out by the learned Senior Counsel for the assessee, Section 36(1)(iii) of the Act does not contemplate any test that the amounts so invested should be "wholly and exclusively for ma....

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.... adduce any material to show that the borrowed capital was utilised by the assessee for non-business purposes. The appellate authority, in our considered view, was correct in allowing the claim of the assessee and deleting the disallowance made by the assessing authority. We also find that the Tribunal in correct appreciation of the matter had in turn confirmed the finding of the appellate authority. We see no reason to interfere with the order passed by the Tribunal. 45. We, thus answer these substantial questions of law in favour of the assessee." 4. Learned counsel for the assessee also pointed out that, in the present assessment order dated 28.12.2006 for the Assessment Year 2004-05 also, the assessing authority has wrongly ....