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TMI Blog2019 (12) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Appellate Tribunal on 13.06.2008 in ITA No.2132/Mds/2007 for the Assessment Year 2000-01. 2. The learned Tribunal dismissed the appeal of the Revenue by holding that Section 40(a) of the Act was not attracted, because the respondent/assessee had obtained, a specific exemption from the concerned Department of Economic Affairs, Ministry of Finance, Government of India, vide Letter No.F.No.4(32)/97-ECB dated 23.09.1997 with respect of the foreign currency loan taken by the respondent/ assessee from M/s.London Forfaiting Asia Ltd., in which, it was clearly stipulated that the assessee need not withhold tax or deduct any tax at source on the payment of interest on such Foreign Currency loan taken by it from M/s.London Forfaiting Asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... working capital requirement from Raghava Enterprises P. Ltd., and once foreign currency loan was available then the loan from Raghava Enterprises P. Ltd. was repaid. In any case, once exemption is granted by the Ministry of Finance, Govt. of India, then in our considered view, the Assessing Officer has no jurisdiction to record further findings that the purpose of loan is different than it was approved for by the Govt. of India. In these circumstances, we find nothing wrong with the order of the CIT (Appeals) on this issue and accordingly confirm the same." 4.The present appeal was admitted by the Coordinate Bench of this Court on 04.12.2008 on the following substantial questions of law: "1.Whether on the facts and in the circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Section 10(15)(f) of the Act provides that such interest payment on the foreign currency loans will be exempted, only if the loan is employed for industrial development in India. But, since in the present case, the loan taken by the assessee from London Forfaiting Asia Ltd. in foreign currency was utilised by it for repayment of another loan from one M/s.Raghava Enterprises P. Limited and the same loan was not directly employed for the industrial development by the Assessee, therefore, the recipients of the said interest viz., M/s.London Forfaiting Asia Ltd. cannot claim any exemption on such interest payment under Section 10(15)(f) of the Act and consequently, the assessee was liable to deduct tax at source and in the absence of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Ltd., Cyprus. c) Amount : USD 3 Million d) Interest : 1.45% p.a. oyer six month LIBOR e) Administrative fees: 0.50% flat. f) Period of Loan : 3 years. Yours faithfully, (B.K.Sinha) Deputy Director (ECB)" 8. The provision of Section 10(15)(i) and (f) is quoted herein below for ready reference: "10. Incomes not included in total income (15)[(i) income by way of interest, premium on redemption or other payment on such securities, bonds annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification in the Official Gazette, specify in this behalf, subject to such conditions and limits as may be specified in the said notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are wide enough to cover within its ambit and scope even the indirect utilisation of the funds for industrial development in India. Therefore, even if the loan taken as working capital loan from M/s. Raghava Enterprises Limited earlier and employed by the assessee for such industrial development and the foreign currency loan in question was utilised to repay the loan to M/s. Raghava Enterprises Private Limited, the exemption given by the Ministry of Finance in favour of the Assessee cannot be said to have been lost by such facts. It is not the case of the Revenue before us, that the exemption given to the assessee vide Letter dated 23.09.1997 stood revoked or withdrawn on any such contingency at any point of time. 11. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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