TMI Blog2014 (8) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Assessee - the Tribunal had erred in dismissing the Appeal – Decided against Revenue. Broken period interest – Allowable as deduction or not – Held that:- There was no infirmity in the orders passed by the CIT (A) or the Tribunal – Tribunal have merely followed the judgment of the Court in the case of American Express International Banking Corporation v/s Commissioner of Income Tax [2002 (9) TMI 96 - BOMBAY High Court] – no substantial question of law arises for consideration – Decided against Revneue. - Income Tax Appeal No. 330 of 2012 - - - Dated:- 23-7-2014 - S. C. Dharmadhikari And B. P. Colabawalla,JJ. For the Appellant : Mr. Suresh Kumar For the Respondent : Mr. J. D. Mistry, Mr. Atul Jasani ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diminution in value of the investment and amortization of premium on investment held to maturity on the ground of mandate by RBI guidelines thereby ignoring the decision of the Supreme Court in the case of Southern Technologies vs. CIT (320 ITR 577) ? 3. With reference to question (A), Mr Suresh Kumar submitted that the ITAT erred in holding that the investments of the Assessee in tax free securities / investments were from the Assessee's own funds. Since the Assessee had paid interest on borrowed funds and and the Assessee's own funds were not separately identified, the investment in Government securities had been made by the Assessee Bank from common pool of funds available with it. According to Mr Suresh Kumar, as per the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, that this issue is squarely covered by a judgment of this Court in the case of Commissioner of Income Tax v/s Reliance Utilities and Power Ltd., reported in (2009) 313 ITR 340 (Bom) is well founded. The facts of that case were that the Assessee viz. M/s Reliance Utilities and Power Ltd. had invested certain amounts in Reliance Gas Ltd. and Reliance Strategic Investments Ltd. It was the case of the Assessee that they themselves were in the business of generation of power and they had earned regular business income therefrom. The investments made by the Assessee in M/s Reliance Gas Ltd. And M/s Reliance Strategic Investments Ltd. were done out of their own funds and were in the regular course of business and therefore no part of the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East India Pharmaceutical Works Ltd. v. CIT (1997) 224 ITR 627 had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India Ltd. (1982) 134 ITR 219 where a similar issue had arisen. Before the Supreme Court it was argued that it should have been presumed that in essence and true character the taxes were paid out of the profits of the relevant year and not out of the overdraft account for the running of the business and in these circumstances the appellant was entitled to claim the deductions. The Supreme Court noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were more than the investment in the tax-free securities. This factual position is not one that is disputed. In the present case, undisputedly the Assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in the tax-free securities. In view of this factual position, as per the judgment of this Court in the case of Reliance Utilities and Power Ltd. (supra), it would have to be presumed that the investment made by the Assessee would be out of the interest-free funds available with the Assessee. We therefore, are unable to agree with the submission of Mr Suresh Kumar that the Tribunal had erred in dismissing the Appeal of the Revenue on this ground. We do not find that question (A) gives r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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