Gujarat High Court
Commissioner Of Income Tax Ii vs Kalthia Engineering And Construction ... on 13 January, 2015
Bench: Jayant Patel, S.H.Vora
O/TAXAP/11/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 11 of 2015
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COMMISSIONER OF INCOME TAX II....Appellant(s)
Versus
KALTHIA ENGINEERING AND CONSTRUCTION LTD....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE JAYANT PATEL
and
HONOURABLE MR.JUSTICE S.H.VORA
Date : 13/01/2015
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE JAYANT PATEL)
1. The present appeal is directed against the order passed by the Tribunal dated 05.08.2014 in ITA No.206/Ahd/2013 for the Assessment Year 2009 2010.
2. We have heard Mr.Bhatt, learned counsel appearing for the appellant.
3. The appellant revenue has formulated two questions being substantial questions of law as under:
"(A) Whether the Appellate Tribunal has substantially erred in deleting the disallowance made of Rs.1,03,21,009/ on account of bad debts without appreciating the fact that the bad debts claimed by the assessee which pertained to KECL JV Ellora, Page 1 of 4 O/TAXAP/11/2015 ORDER a Joint Venture for work relating to MSRDC?
(B) Whether the Appellate Tribunal has substantially erred in restricting the disallowance made on account of interest expenditure u/s 14A r.w.r. 8D, thereby deleting the addition of Rs.15,52,448/ without appreciating the fact that the assessee had made substantial investment in shares of the associates company, financing or money lending and this investment had been made with the sole purpose of earning dividend which had been claimed as exempt income?"
4. On the first question, the perusal of the order passed by the Tribunal shows that the Tribunal in view of the decision of the Apex Court in the case of TRF Ltd. vs. CIT reported in 323 ITR 397 has held against the revenue. We do not find any substantial question of law would arise as sought to be canvassed since the question raised is already covered by the above referred decision of the Apex Court.
5. On the aspect of question (B), the perusal of the reasoning recorded by the Tribunal at paragraph 9 of the impugned order shows that the Tribunal has relied upon the decision of the Bombay High Court in the case of CIT vs. Reliance Utilities & Power Ltd. reported in (2009) 313 ITR 340 (Bombay). We may also record that the very decision of the Page 2 of 4 O/TAXAP/11/2015 ORDER Bombay High Court came to be considered by this Court in Tax Appeal No.57/11 decided on 19.03.2013 and this Court observed at paragraph 4, as under:
"4. Second question pertains to deletion of disallowance of Rs.4,99,370/ being the interest attributable to interest free advances. CIT(Appeals) when was approached by the assessee, it held in favour of the assessee by holding thus:
3.3 I find that the contentions of the appellate are tenable on facts on record in that the borrowed funds have been used for specific purpose of acquiring fixed assets and the availability of surplus funds in making the advances in dispute cannot be disbelieved. Also the major part of advances at Rs.90 Lacs was for trading security and balance advances are in any case covered by the availability interest free funds. In that view of the matter, there is no factual basis to compute any interest for disallowance on prorate or otherwise.
The addition of Rs.4,99,370/ is hence without basis and directed to be deleted.
The Tribunal relied on the decision of the Bombay High Court in case of CIT vs. Reliance Utilities and Power Ltd. reported in (2009) 313 ITR 340 (Bom.). It was held that if there were funds available both interestfee and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest free fund generated or available with the company, if the interestfree funds were sufficient to meet the investments. We see no reason to interfere in the said issue when both the Authorities have Page 3 of 4 O/TAXAP/11/2015 ORDER concurrently held that there were sufficient funds available with the company and they held in favour of the assessee. Therefore, no substantial question of law arises."
Apart from the above, the another aspect is that in the impugned order of the Tribunal at the very paragraph 9, it has been recorded as under:
"We further find that the Revenue has not brought any material on record to controvert the findings of the ld. CIT(A)."
The aforesaid would be in the arena of finding of fact, which cannot be gone into in the present appeal which is limited to substantial question of law. Hence, we find that no substantial question of law arises as canvassed.
6. Hence, the appeal is meritless and therefore, dismissed.
(JAYANT PATEL, J.) (S.H.VORA, J.) bjoy Page 4 of 4