TMI Blog2019 (3) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was a public finance institution constituted under the Act. The Tribunal also noted that the assessee had substantial own funds which were deployed in bonds and securities which yielded receipts exempt under Section 10(23G) of the Act. In our opinion, the Tribunal, therefore, correctly applied the decision of this Court in the case of Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT]. Revenue had not been able to establish any direct co-relation between the assessee's local borrowings and its investments in infrastructure development projects. For such reasons, no question of law arises. Hence, this question is not entertained. - decided against revenue Exemption under Section 10(33) - HELD THAT:- The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accounts and the interest income was embedded in the profit / loss. This was during the period which such income was exempt from tax. - decided against revenue - Income Tax Appeal No. 1090 of 2014 with Income Tax Appeal No. 1101 of 2014 Income Tax Appeal No. 1104 of 2014 - - - Dated:- 11-3-2019 - AKIL KURESHI SARANG V. KOTWAL, JJ. Mr. Suresh Kumar for the Appellant Ms. A Vissanji a/w Mr. Srihari Iyer for the Respondent P.C.: 1. These appeals arise in similar background. We may notice the facts from Income Tax Appeal No. 1090 of 2014. 2. Revenue is in the appeal against the judgment of the Income Tax Appellate Tribunal ( the Tribunal for short) raising following questions for our consideration:- (i) Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such interest become taxable in the year of receipt is also directly applicable on the facts of the case? 3. The assessee is a Public Financial Institution within the meaning of Section 4A of the Companies Act, 1956 and was formed under the Export Import Bank of India Act, 1981. The questions relate to the return of income of the respondent assessee for the assessment year 2000-01. 4. The first question arises out of the dispute between the Revenue and the Assessee regarding restriction of exemption under Section 10(23G) of the Income Tax Act,1961 ( the Act for short). The Assessing Officer held that such exemption would be available on net income and not on the gross interest receipt. We notice that the assessee had raised fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had substantial own funds which were deployed in bonds and securities which yielded receipts exempt under Section 10(23G) of the Act. In our opinion, the Tribunal, therefore, correctly applied the decision of this Court in the case of Reliance Utilities Power Ltd (supra). In the context of expenditure under Section 36(1)(iii) of the Act, the Court after referring to and relying upon the decision of the Supreme Court in the case of S.A. Builders Ltd Vs. CIT [2007] 288 ITR 1 (SC) had held that when the assessee had made investments in sister concerns out of interest free funds and claimed expenditure of interest on borrowed capital used for business, the same was allowable. We notice that the decision of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned judgment rejected such a contention inter alia observing that the interest income during the earlier period when it accrued, was exempt and the assessee was not even required to file return, however, the assessee had maintained accounts clearly establishing the accrual of income. The Tribunal further noted that Section 43D of the Act would not apply to the assessee. 11. We are broadly in agreement with the view of the Tribunal. Learned counsel for the assessee was correct in pointing out that the income in question would be taxable on the basis of accrual. When such income accrued, it was not taxable. The Revenue now cannot bring the income to tax in the current year simply because such exemption was withdrawn relying upon the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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