TMI Blog2019 (12) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ghava Enterprises P. Limited, which was admittedly taken from M/s. Raghava Enterprises Limited towards its working capital requirement, the purpose of Section 10(15)(f) of the Act, for the industrial development stood satisfied in the present case. The words in the said provision quoted above are not for industrial development , but the words having regard to the need for industrial development in India , which are wider in nature. These words employed in Section 10(15)(f) 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed 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 Asia Ltd. and therefore, the said interest payment could not be added back to the declared income of Assessee under Section 40(a) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the interest payment of ₹ 73,91,128/- ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empted, 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 the same, the interest payment was liable to be added back to its declared income under Section 40(a) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) Name of the Lender : M/s.London Forfaiting Asia 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 certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood satisfied in the present case. 10. The words in the said provision quoted above are not for industrial development , but the words having regard to the need for industrial development in India , which are wider in nature. These words employed in Section 10(15)(f) of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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