2022 (11) TMI 782

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.... Cuttack (ITAT) in ITA No.449/CTK/2010 for the Assessment Year (AY) 2007-08; ITA No.493/CTK/2011 for the AY 2008-09; ITA No.585/CTK/2012 for the AY 2009-10; ITA No.558/CTK/2013 for the AY 2006-07 and ITA No.98/CTK/2010 for the AY 2006-07. 2. While admitting these appeals on 18th December, 2019 the following two questions were framed for consideration by this Court: "(1) Whether on the facts and in the circumstances of the case and when the compensation made by the assesse company to the subsidiaries which are by themselves are independent legal entities and does not amount to assisting promotional activities of industrial undertaking in the case of the assesse company and hence it is not a business expenditure attributable to th....

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....he said subsidiary companies from the Assessee and others. 6. During the course of assessment, the Respondent-Assessee was asked to explain the above payment of 'compensation' to the two subsidiary companies. The explanation offered was that two mines operated by the Assessee were taken for captive use and this was to assure cheap raw material supply to ensure the long-term viability of the subsidiary companies. However, on finding that the ores available in the said mines were not suitable for use in production of high carbon Ferro Chrome, the ores were sold in the open market and the ores of desired grade and specification were purchased from outside parties, which resulted in substantial financial loss to the subsidiaries. It was this....

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....was raised in assessee's own case before the Tribunal vide ITA Nos.69 & 70/CTK/94 for assessment year 1989-90 & 1990-91 and has been decided in favour of the assessee by holding, by the Co-ordinate Bench that "financing or aiding or assisting any promotional activities of industrial undertaking is part of the business of the assessee company" for overall promotion of industrial development in Orissa." 9. On 20th April, 2022 when these appeals were heard, a query was posed to Mr. Satapathy, learned Senior Standing Counsel for the Revenue, by the Court whether any appeal had been filed by the Department against the orders of the ITAT in the appeals in ITA Nos.69 and 70/CTK of 1994 filed by the Assessee for AYs 1989-90 and 1990-91. 10. A....

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.... the CIT(A) had disallowed the said amount as deduction, the Assessee approached the ITAT. Among the reasons that weighed with the ITAT for allowing the claim of the Assessee was that "Loans and advances, promotional activities, etc., in our opinion, are not outside the objects of the assessee-company as per its Memorandum of Association and hence the loss arising in writing off the loans and advances is liable to be treated as loss incurred in the course of carrying on its business and allowable as deduction in the years under consideration. Similarly, the expenditure incurred on the aborted projects in the wake of the decisions mentioned herein above, is allowable as revenue expenditure. As far as the year of allowability is conc....