2010 (9) TMI 1186 - HC - Income Tax

Summary

Issues involved:
The issues involved in this case are:
1. Disallowance of interest payable under Section 36(1)(iii) of the Income Tax Act, 1961.
2. Validity of transaction between the assessee and ICICI.
3. Entitlement of the assessee for lease rent as a hire purchaser.

Disallowance of interest payable:
The appellant-Revenue raised a question regarding the deletion of disallowance of interest payable amounting to Rs. 48,70,43,278/- by the Income Tax Appellate Tribunal. The Tribunal held that the amount was revenue expenditure allowable under Section 36(1)(iii) of the Act, disregarding the provisions of Section 43(1) Explanation 8 of the Act. The Court found that the controversy was already concluded in the assessee's own case in Tax Appeal No.236/2001, and thus dismissed the appeal.

Validity of transaction:
Another question raised was whether the transaction between the assessee and ICICI was a sham transaction. The Income Tax Appellate Tribunal did not appreciate this argument. However, based on the previous order in Tax Appeal No.236/2001, the Court found no grounds to interfere with the impugned order of the Tribunal and dismissed the appeal.

Entitlement for lease rent:
The third question raised was whether the assessee, being a hire purchaser, was entitled to lease rent amounting to Rs. 19,60,46,324/-. The Income Tax Appellate Tribunal held in favor of the assessee on this issue. Due to the reasons stated in the previous order in Tax Appeal No.236/2001, the Court found no legal question to interfere with the Tribunal's decision and thus dismissed the appeal.