TMI Blog2017 (2) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... 10B, Section 35(2)(a)(b) etc.), where either the specific power is granted or the concerned authority/agency itself is mentioned; the particular elusion to the Central Government cannot, in the opinion of the Court in any manner, undermine or render valueless the approval granted by one of the agencies or departments of the Government. This view is more crucially important - given the fact that in the present case, the Department of Revenue did not express any contrary opinion in its approval dated 15.01.1999. In this context, the Court holds the Revenue’s arguments - that the amounts mentioned in the Department of Revenue’s approval do not tally with the approval granted by the Department of Economic Affairs utterly unsubstantial. What ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the rate of interest, terms of the loan and its repayment of purpose of Section10(15)(iv)(c) of the Income Tax Act? 2. The assessee was at the relevant time engaged in the business of printing and binding of telephone directories. For its business, it imported machinery from a foreign supplier i.e. M/s. Quebecor Printing Ltd. Inc., Canada on deferred credit to the tune of Canadian dollars 25,74,537 equivalent to ₹ 5,94,86,535/-. It sought the benefit of Section 10(15)(iv)(c) of the Income Tax Act, 1961 (hereinafter to be referred as the Act ) by seeking approval of the Central Government. By a letter dated 25.05.1995 the Department of Economic Affairs, Ministry of Finance of the Central Government approved the proposal bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by scheduled commercial bank(s) or DFI(s) in India. The counter guarantee from a foreign bank or confirmation of a scheduled bank or DFI's guarantee by a foreign bank will not be permitted under any circumstances. The guarantee issuance, however, would be subject to the authorization of Industrial Export Credit Department of Reserve Bank of India under CAS. 6. The Reserve Bank of India would be advised to allow you to draw any loan and effect the advance payment/down payment only after your agreement with the lender is taken on record by this Department. You are, therefore, requested to make available to this Department two executed copies of the agreement immediately, after it is entered into, with reference to this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... country to which the amount was remitted. 4. The Assessment Officer ( AO ) while completing assessment was of the opinion that since tax was deductable under Section 195 of the Act, the amounts had to be disallowed under Section 40(a)(i) of the Act and proceeded to do so. The CIT(A), whom the assessee approached, granted relief taking a broad view of the matter. The Commissioner was of the opinion that the provision relied upon i.e. Section 10(15)(iv)(c) of the Act, merely talks of the Central Government and that in the circumstances of the case since the assessee had already obtained the approval of the Department of Economic Affairs and subsequently of the RBI (the latter with respect to the foreign exchange of loan) and most cruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the concerned department , which in this case is none other than the Department of Revenue. He highlighted the fact that the assessee approached the Department of Revenue after an inordinate delay though it was asked to do so by the RBI on 22.12.1995. By the time it did approach, it had already filed the return. Given these circumstances, the invocation of Section 40(a)(i) of the Act was not unjustified, the assessee would very well availed its opportunity of approaching the AO under Section 195 of the Act, which it did not at the relevant point of time. 7. Section 10(15)(iv)(c) of the Act reads as follows:- (15)(iv) interest payable - (c) by an industrial undertaking in India on any moneys borrowed or debt incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antial. What the Department of Economic Affairs has approved is the transaction and the rate of interest. That the assessee availed a lesser amount of credit or loan did not mean that there was no approval. Particularly, because it is not the Revenue s case that the Department of Revenue approved an entirely different transaction. 9. In view of the above discussion, the Court is of the opinion that the impugned order of the ITAT cannot be sustained. It is accordingly set aside. The assessee is held entitled to the benefit of claim of deduction of interest made by it, in its return. The questions of laws are accordingly answered in favour of the assessee and against the Revenue. The appeal is allowed. - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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