TMI Blog2013 (7) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... in favor of assessee. - ITA No. 212/Mum./2009 - - - Dated:- 30-4-2013 - Shri B. Ramakotaiah And Shri Amit Shukla,JJ. For the Petitioner : Mr. J. D. Mistri For the Respondent : Mr. Girija Dayal ORDER Per Amit Shukla, J. M. The present appeal preferred by the Assessee, is against the impugned order dated 25th November 2008, passed by the learned Commissioner (Appeals)-III, Mumbai, for the quantum of assessment passed under section 143(3) of the Income Tax Act, 1961 (for short "the Act"), for the assessment year 2004-05. 2. The main issue challenged by the assessee in the ground of appeal is disallowance of premium of Rs. 31,94,29,775 paid by the assessee on redemption of premium notes. 3. The learned Sr. Counsel, Mr. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med and premium of Rs. 31,94,29,775 has been paid to Reliance Industrial Enterprise Pvt. Ltd. The Assessing Officer observed that since the income arising out of investment made in shares / bonds of Reliance Utilities and Power Ltd. is not taxable in view of exemption under section 10(23G) and also why such the premium paid should not be disallowed under section 14A. In response, the assessee gave detail submissions which have been incorporated in Para-4.3 of the assessment order. However, the Assessing Officer, after detail reasoning, held that firstly, the premium paid on the redemption of debenture is not in the nature of expenditure incurred for the purpose of business and secondly, it is also disallowable under section 14A. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee that the premium paid by the assessee on redemption of premium notes (OCPN) utilized for making investment in the shares/debentures of RUPL can not be regarded as expenditure incurred exclusively in relation to earning of exempt income so as to invoke the provisions of section 14A. Moreover, the said investment had the potential of generating taxable income also as explained by the learned counsel for the assessee in the form of short term capital gains etc. In this regard, the learned DR has submitted that no such taxable income however was and 15 other appeals actually earned by the assesses during the years under consideration. The learned counsel for the assessee on the other hand has pointed out that no exempt in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Delite Enterprises (supra) was challenged by the Revenue in an appeal preferred before the Hon'ble Bombay High Court and their Lordships considered following question which projected the grievance of the revenue on this issue: "Whether on the facts and in the circumstances of the case and in law the Hon'ble Tribunal was right in deleting the disallowance made by the Assessing Officer of interest paid by the Assessee Company on the borrowed funds amounting to Rs. 241.10 lakhs overlooking the fact that the borrowed funds were used by the Assessee Company to invest in the capital of another Partnership Firm and since profits derived by the Assessee Company from a partnership firm were exempt from tax u/s 10(2A) of the Income tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry disposal of appeal by the High Court were analysed and explained by their Lordships. It was clarified that while hearing an appeal even for deciding whether substantial question of law arises or not from the order of the Tribunal, the High Court does not exercise either the original jurisdiction or the jurisdiction to issue writs and the only jurisdiction exercised by the High Court is the appellate jurisdiction. It was held that merely because the High Court in the first instance decides whether or not substantial question of law arises from the order of the Tribunal, it can not be said that the High Court does not exercise the appellate powers or that there is no decision on merit when the high court dismisses an appeal holding that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdictional High Court and delete the disallowance made by the AO and confirmed by the learned CIT(A) on account of premium paid by the assessees on redemption of premium notes(OCPN) by invoking the provisions of section 14A of the Act. As regards the case laws cited by the learned DR, it is observed that in none of these cases, the facts involved were similar to the case of the present assessees in as much as the investment made therein was not found to be capable of earning taxable as well as exempt income which was actually not earned by the assessee in the relevant period as are the facts of the present case or that of the case of Delite Enterprise (supra) decided by the Hon'ble Bombay High Court. Accordingly, we decide the common is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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