2018 (8) TMI 1843 - HC - Income Tax

Re-assessment proceedings - capital gains on transfer of undertaking - disallowance of interest accrued to the Bank, interest disallowed on diversion of borrowed funds to sister concerns and whether the Foreign Exchange loss is a permissible deduction - HELD THAT - A reading of the Tribunal order indicates that they have not looked into the facts and without any application of mind found in favour of the assessee merely quoting judgments without applying them to the facts of the case. We specifically notice that the appeals are of the year 2010 and the same were pending here for the last eight years. If we go ahead to consider the appeals, then we would be assuming the role of the Tribunal, which is the last fact finding authority. Only in such circumstances, we would remand the issue to be considered by the Tribunal. We have to notice while remanding the matter that, there is a Cross Objection filed by the Revenue; against which there is no appeal filed. In fact, all the questions were found against the assessee, by the assessing authority and the first appellate authority. In such circumstances, the Cross Appeal would stand rejected as unnecessary and such rejection would not affect the consideration of the appeal by the assessee. The common impugned order is set aside - we request the Tribunal to dispose of the appeals within a period of six months from the date of receipt of a certified copy of this judgment.

Summary

Issues:
1. Disallowance of interest accrued to the Bank
2. Disallowance of interest on diversion of borrowed funds to sister concerns
3. Foreign Exchange loss as a permissible deduction
4. Capital gains on transfer of undertaking

Analysis:
The High Court criticized the Tribunal's order, stating it lacked proper fact-finding and application of mind. In I.T.A.No.201 of 2010, the issues included disallowance of interest accrued to the Bank, interest disallowed on diversion of borrowed funds to sister concerns, and the permissibility of Foreign Exchange loss as a deduction. In I.T.A.No.281 of 2010, related to reassessment proceedings, the issue was capital gains on the transfer of undertaking. The Court noted the Tribunal's failure to consider facts and blindly favor the assessee without proper analysis. The Court highlighted the long pendency of the appeals and emphasized that remanding the issue to the Tribunal was necessary as it is the final fact-finding authority. The Court set aside the impugned order and directed the Tribunal to dispose of the appeals within six months from the judgment's receipt. The Court also rejected the Cross Objection filed by the Revenue as unnecessary, ensuring it does not affect the consideration of the appeal by the assessee. The parties were directed to appear before the Tribunal on a specified date. The appeals were disposed of without costs.