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TMI Blog2020 (11) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,80,77,269/- on 10.11.2014. The case was selected for scrutiny under CASS and notices under section 143(2) and 142(1) were issued and served on the assessee. In response, AR of the assessee filed the relevant information as called for. After considering the submission of assessee, assessment was completed by the assessing officer by making disallowances as the assessee has received exempt income during this year. 4 Aggrieved with the above order, assessee preferred an appeal before Ld. CIT(A) and Ld. CIT(A) deleted the addition made by the assessing officer. However, he observed that assessee's investment in shares were more than its interest-free funds by way of share capital and reserves. Accordingly, he issued enhancement notice to Assessee. In response assessee submitted that assessee is the part of global group, a diversified technology and infrastructure services company focused on Telecom and Power. The main objectives of the company are, provides network service solutions to telecom operators, OEMs and Tower companies. In the power sector, the assessee offers EPC services, Distribution Franchisee and Grid solutions to Utilities and Distribution companies. The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how the capital advances of Rs. 1 064.02 and investment in units of mutual funds of Rs. 356.25 served on the assessee's business. Therefore he opined that the fund invested in CNIL and GIL was utilised by those companies not for their business but for making investments in other concerns or in mutual funds etc. therefore, he rejected the contention of the assessee that the investment is made for business expediency i.e correct in order to allow the interest expenditure, must have immediate nexus with the business of the assessee, in other words the money must be used for the assessee's own business or for business of its subsidiary directly for its business. In case where the funds borrowed by the assessee is given to another concern and such another concern uses the money to yet another concern then there is no business expediency. 6. As per the above observation, Ld. CIT(A) held that investment made by the assessee aggregating to Rs. 2639.75 Crores and he observed that assessee has debited finance cost of Rs. 540.92 Crores. And he observed that assessee's long-term borrowing of Rs. 2900.60 crores and short-term borrowing of Rs. 245.65. Therefore, on pro rata basis, the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operators. This was done through an investment in GTL Infrastructure Limited ("GIL") and Chennai Network Infrastructure Limited. 2.2.5 As with GIL, the investment in CNIL would also help to increase the Company's revenue by providing Operations and Maintainence Services for Passive Telecom Infrastructure Undertakings. 2.2.6 The Appellant would like to submit that a mere glance of the investment schedule at Pg 76 of the Factual Paper Book ("FPB") of the Company will reflect that majority of the investments are in Associate Companies, Chennai Network Infrastructure Limited ("CNIL") of 1637 cr and GTL Infrastructure Limited ("GIL") of Rs. 291.23 cr . It is pertinent to note that CNIL and GIL are major contributors to the revenue of the Company as is illustrated from the table below: ASSOCIATE COMPANY FY 2012-13 FY 2011-12 FY 2013-14 Rs. %of Total Revenue Rs %of Total Revenue Rs % of Total Revenue GTL INFRASTRUCTURE LIMITED 318.89 14.68 328.62 14.93 327.71 14.47 CHENNAI NETWORK INFRASTRUCTURE LIMITED 197.96 9.12 366.33 16.64 287.49 12.69 Total 516.85 23.80 694.95 31.57 615.2 27.16 2.2.7 The aforesaid revenues have been generated from Energy Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l)(iii) of the Act. 2.3 Submissions on specific observations and findings of the Ld. CIT(A); a. The Ld.CIT(A) in Para 6.3.1 of his Order has stated that is there is no commercial expediency in the Appellant's case. However this statement is factually incorrect as explained hereunder: The Appellant vide submission dated June 22, 2018 submitted before the Ld. CIT(A) ( Refer Pg.75 of FPB) had explained the commercial rationale of making investments in it's group companies Chennai Network Infrastructure Limited ("CNIL") of 1637 cr and GTL Infrastructure Limited ("GIL") of Rs. 291.23 cr. The Appellant also vide a diagrammatical representation submitted before the Hon'ble Bench explained the shareholding of the Global Group and how along with it's flagship company Global Holding Corporation Pvt. Ltd("GHC"), the Appellant substantially controlled both GIL as well as CNIL. Whereas GIL was Global Group's own company which was in the business of passive infrastructure, CNIL was acquired from the Aircel Group under a business purchase agreement. While GTL as well as GIL are public listed companies, CNIL was a public limited company. The Appellant also explained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares of GIL and CNIL intern GIL holding shares hundred percent in Tower Trust in turn Tower Trust holding considerable shares in CNIL. In summary, as per the balance sheet as on 31.03.2013, Assessee was holding shares in GIL 7.38%, in CNIL 27.02% and Tower trust holding 28.04% in CNIL therefore all these companies are indirectly subsidiary companies of Global Holding Corporation Private Limited. 14. The definition of subsidiary companies are, As per Section 2(87) of Companies Act 2013, which comprises of two parts, one which controls the composition of directors and two, which holds or controls more than half of the shares on its own or with other companies. From the above definition and the composition of the group companies, we can see that the assessee company is holding substantial shareholding and also considering the set up of the group companies, we can see that Global Holding company controls the whole group concerns which includes assessee company. The assessee company also under control of Global Holding. Assessee companies invest in other group companies in which holding company controls the majors shares as well as controls composition of directors. Therefore, we can s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax effect in the above referred appeal is less than Rs. 50 lacs. Accordingly, we dismiss the aforesaid appeal filed by the revenue as not maintainable. 21. Consequently, the appeal filed by the revenue stands dismissed. Cross Objection (CO) NO. 192/Mum/2019 (AY 2013-14) 22. Since we have already dismissed the appeal of revenue filed in ITA No. 937/Mum/2019 for AY 2013-13, therefore the present cross objection filed by the assessee becomes infructuous as dismissed. 23. In the net result, the appeal filed by the assessee is allowed and the appeal of revenue and CO of assessee are dismissed. 24. It is pertinent to mention here that this order is pronounced after a period of 90 days from the date of conclusion of the hearing. In this regard, we place reliance on the decision of co-ordinate bench of this Tribunal in the case of JSW Ltd in ITA Nos. 6264 & 6103/Mum/2018 dated 14.5.2020, wherein this issue has been addressed in detail allowing time to pronounce the order beyond 90 days from the date of conclusion of hearing by excluding the days for which the lockdown announced by the Government was in force. The relevant observations of this tribunal in the said binding precedent ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the ruled so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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