2018 (2) TMI 1789 - HC - Income Tax

Tax Appeal is admitted for consideration of following substantial questions of law A. Whether the Tribunal erred in law and on facts in granting the deduction u/s 80IB of the Act on duty draw back of ₹ 18,01,67,542/-? B. Whether the Tribunal erred in law and on facts in granting the deduction u/s. 80IB of the Act of ₹ 28,54,26,054/- on interest income on FDI/ICD? C. Whether the Tribunal erred in law and on facts in deleting the addition made on account of upward adjustment u/s. 92CA(3) of the Act on account of guarantee fee on loans availed by AEs of Assessee against guarantee of Assessee?

Summary

Issues:
1. Granting deduction under section 80IB of the Act on duty drawback
2. Granting deduction under section 80IB of the Act on interest income on FDI/ICD
3. Deleting addition made on account of upward adjustment under section 92CA(3) of the Act
4. Disallowance of national loss on outstanding forex derivatives contracts
5. Granting deduction under section 80IB of the Act on interest income received from debtors
6. Granting tax credit in respect of royalty income not claimed in original or revised return of income

Analysis:

1. The High Court admitted the Tax Appeal to consider substantial questions of law, including whether the Tribunal erred in granting deductions under section 80IB of the Act on duty drawback and interest income on FDI/ICD. The Court agreed to examine these issues for further clarification.

2. The Court also addressed the deletion of an addition made on account of upward adjustment under section 92CA(3) of the Act. However, the Court decided not to entertain the Revenue's proposed questions related to this issue, citing conformity with previous decisions and references to Supreme Court judgments.

3. Another issue involved the disallowance of national loss on outstanding forex derivatives contracts. The Court decided not to consider the proposed question by the Revenue, indicating that the Tribunal's decision aligned with previous rulings and established legal principles.

4. The Court further discussed the grant of deduction under section 80IB of the Act on interest income received from debtors. While the Revenue proposed a question on this matter, the Court did not entertain it, emphasizing the Tribunal's correct application of previous court decisions.

5. Lastly, the issue of granting tax credit in respect of royalty income not claimed in the original or revised return of income was addressed. The Court decided not to entertain this question, citing references to Supreme Court judgments and previous decisions by the Tribunal in similar cases.

6. In conclusion, the Court allowed the draft amendment and admitted the Tax Appeal for consideration of the specified substantial questions of law. The Court clarified its stance on each issue raised by the parties and provided reasons for not entertaining certain proposed questions based on established legal principles and previous judgments. The case was scheduled to be heard along with another Tax Appeal.