Commissioner Of Income Tax-I vs Abhishek Industries Ltd. on 4 August, 2006
In Indian Metals & Ferro Alloys Ltd. v. Commissioner of Income Tax (1992) 193 ITR 344, Orissa High Court held as under:
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Indian Metals And Ferro Alloys Ltd. vs Commissioner Of Income-Tax And Anr. on 22 March, 1993
Maharashtra Seamless Ltd, vs Department Of Income Tax on 13 October, 2010
12. The reliance placed by the Revenue on the judgment in the case of
'India Metals and Ferro Alloys Ltd. v. CIT' (supra) in support of its
contention is misplaced, so far as the present case is concerned.
Debikay Information Technology Ltd. vs Assistant Commissioner Of Income Tax on 4 February, 1998
Extermpore Securities And Investments ... vs Deputy Commissioner Of Income Tax on 8 April, 2008
Mafatlal Holdings Ltd. vs Additional Commissioner Of Income Tax on 23 April, 2003
He further referred to the decision of the Orissa High Court in the case of Indian Metals & Ferro Alloys Ltd. v. CIT (1992) 193 ITR 344 (On), wherein the High Court has held that the assessee is not entitled to interest under Section 36(1)(iii) in respect of borrowed capital which was invested in subsidiary company. The AO, therefore, disallowed the interest of Rs. 1,74,12,682 paid by the assessee- company on borrowed capital and claimed the same as expenditure incurred for the purpose of its business.
Smt. Neerja Birla vs Assistant Commissioner Of Income Tax on 31 January, 1997
He relied on CIT vs. Sutlej Cotton Mills Supply Agency Ltd. (1975) 100 ITR 706 (SC), Bhagirath Prasad Bilgaiya vs. CIT (1983) 139 ITR 916 (MP), Juggilal Kamlapat vs. CIT (1970) 75 ITR 186 (SC), G. Venkataswami Naidu & Co. vs. CIT (1959) 35 ITR 594 (SC), Tribhuvandas Vallabhdas vs. CIT (1966) 61 ITR 518 (Bom), Hemchand Hirachand Shah vs. CIT (1994) 206 ITR 55 (Guj), Indian Metals & Ferro Alloys Ltd. vs. CIT (1993) 203 ITR 729 (Ori), Raja Bahadur Kamakhya Narain Singh vs. CIT (1970) 77 ITR 253 (SC) and CIT vs. Smt. Minal Rameshchandra (1987)167 ITR 507 (Guj). The further plea raised was that there was no compelling reason for purchase of 7,00,000 shares.
Jet Electronics vs Assistant Commissioner Of Income Tax on 26 October, 2007
15. We have gone through the decisions as relied upon by the learned > Departmental Representative. We find that in the case of Indian Metals & Ferro Alloys Ltd. (supra) the issue relates to whether the CIT has the jurisdiction to revise the assessment when a petition under Section 273A was pending before the CIT on the writ filed by the assessee, the Hon'ble Bombay High Court has held that the CIT was competent to revise the assessment and the writ petition filed by the assessee is not an appropriate remedy to the assessee as appeal has been provided against the order passed under Section 263 before the Tribunal. In that forum all factual disputes can be effectively adjudicated. This judgment does not relate to the issue whether the CIT can revise the assessment when the issue has been duly examined by the AO. Thus, this decision will not assist the Revenue.
Malwa Cotton Spinning Mills vs Asstt. Cit on 10 December, 2003
17. The learned Departmental Representative placed reliance on the judgment of the Honble Orissa High Court in the case of Indian Metals & Ferro Alloys Ltd. v. CIT (supra). In this case, the assessing officer disallowed interest amounting to Rs. 1,97,616 in view of loan advanced by the assessee to the subsidiary company. The Honble High Court held that the assessee was required to show that the amounts advanced to the subsidiary company came out of the assessees own funds. The Tribunal with reference to the factual aspects came to hold that the money utilised was from the borrowed funds. Strong reliance had been placed on the accepted position that the assessee earned profit of more than Rs. 70 lakhs during the year, which was much more than the investment in advances. It was observed by the Honble High Court that the substance of this argument could have been countenanced had the assessee placed material to show that it had generated surplus, in excess of investment in advances, prior to such investment and advance. No material was placed in this regard by the assessee. It was, therefore, held that the Tribunal was justified in holding that the assessee was not entitled to deduction of interest in respect of advances made to the subsidiary company. However, in the present case, it is an undisputed fact that the assessee had only one bank account which was the CC a/c with the same bank. The entire cash profits earned during the year were also deposited in the same bank account. The total cash profit during the year was Rs. 18.42 crores. The proportionate amount for 7 months computed by the learned AM upto the date of first advance has been estimated at Rs. 10.5 crores. It has not been disputed by the departmental authorities nor by the learned Departmental Representative that the entire cash profits were pumped into the same bank account. The facts of the present case are, therefore, clearly distinguishable with the facts of the aforesaid judgment of the Honble Orissa High Court. The learned Departmental Representative had also placed reliance on the judgment of the Honble Madras High Court in the case of K. Somasundaram & Bros.
S.A. Builders Ltd. vs Asstt. Cit on 20 June, 2002
(i) Indian Metals & Ferro Alloys Ltd. v. CIT (1992) 193 ITR 344 (Ori) Wherein it was held that interest in respect of investment in an advanced to a subsidiary company was not deductible under section 36(1)(iii).
Deputy Commissioner Of Income Tax vs Industrial Cables (I) Ltd. on 24 October, 2003
11.10 Even in the case of Indian Metals & Feno Alloys Ltd, (supra), relied upon by the learned Departmental Representative for the Revenue, their Lordships of the Orissa High Court were of the opinion that in case the assessee is able to place material on record to show that it had generated surpluses in excess of the investment prior to such investments in advance, the assessee was entitled to deduction of interest in respect of investments made in the subsidiary companies.