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Commissioner of Income Tax-7 Mumbai Versus M/s. Reliance Petromarketing Ltd.

2016 (9) TMI 599 - BOMBAY HIGH COURT

Addition u/s 41 - whether Tribunal was justified in holding that the amount raised by the assessee by way of loan and interest expenditure pertaining thereto is for the purpose of business of the assessee being in nature of commercial expediency? - Held that:- It is not disputed before us in the present facts that issue of debenture was a loan and discount, was in the nature of interest / expenditure for the loan. We find that the decision of the Apex Court in S.A. Builders (supra) still holds f .....

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ith each other. - Disallowance u/s 14A read with Rule 8D - Held that:- The issue stands concluded against the Revenue by the decision of this Court in Godrej & Boyce (2010 (8) TMI 77 - BOMBAY HIGH COURT ). In the above case, this Court has held that disallowance under Section 14A of the Act on application of Rule 8D of the Rules would only apply from A.Y. 2008-09, prior thereto it has to be by a reasonable method. - Income Tax Appeal No. 390 of 2014 - Dated:- 23-8-2016 - M. S. Sanklecha And .....

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er on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the amount raised by the assessee by way of loan and interest expenditure pertaining thereto is for the purpose of business of the assessee being in nature of commercial expediency in view of the decision of Hon'ble Supreme Court in case of S.A. Builders Ltd. whereas the factual matrix of the case makes it very clear that the entire amount raised by way of convertible debenture was adv .....

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e the Hon'ble Supreme Court? 3. Regarding Question (i) : (a) In the previous year relevant to A.Y. 200708, the respondent assessee had issued 1,32,50,000 Zero Coupon Secured optionally convertible redeemable debentures (debentures) of the face value of ₹ 1,000/each at a discount of ₹ 400/per debenture. These debentures were redeemable in 2011 at a face value of ₹ 1,000/each. The difference of ₹ 400/was amortised by the assessee over this entire period i.e. from date o .....

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the respondent assessee carried the issue in appeal. The first Appellate Authority after holding that Section 41(1) of the Act would have no application nor is it capital expenditure, disallowed the claim of expenditure on the ground that the deduction of discount claimed was in the nature of interest free advances given to sister concern and, therefore, not wholly and exclusively expended for purposes of its business under Section 37 of the Act. On further appeal, the Tribunal by the impugned o .....

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r a finding of fact that the amounts of discount given on issue of debentures was for the business / commercial expediency and allowable as an expenditure. The impugned order also holds that investment is one of its objects, therefore, a part of its business activity. (c) The grievance of the Revenue before us is that the decision of the Apex Court in S.A. Builders Ltd. (supra) calls for reconsideration as noted by the Apex Court in its order dated 30th April, 2012 while admitting Special Leave .....

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lders (supra) still holds field as its operation has not been stayed. Therefore, the Tribunal was justified in relying upon a binding decision of the Apex Court in S.A. Builders (supra) to examine the case of the respondent assessee before it to determine whether the expenditure was on account of commercial expediency and on facts held it to be so. This on account of undisputed position that the debentures were issued to a sister concern in the same line of business having business connection wi .....

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