2017 (8) TMI 725 - HC - Income Tax

Interest free loan given to Andhra Pradesh Rayons Limited - commercial expediency - deduction of royalty on bamboo exploited be allowed at rates other than those specified in the 1968 and 1947 agreements - Held that - Decided in favour of assessee as relying on The Commissioner of Income Tax, Nagpur Versus M/s. Ballarpur Industries Ltd. 2017 (8) TMI 610 - BOMBAY HIGH COURT . Addition in respect of income from gross fees for management and technical services - Held that - Issue raised herein is concluded against the Revenue in view of decisions of this Court in Reliance Infrastructure Ltd. vs. Commissioner of Income Tax, City VI, Mumbai (2016 (12) TMI 1293 - BOMBAY HIGH COURT) and in Commissioner of Income Tax vs. Ambalal Kilachand, (1994 (4) TMI 67 - BOMBAY High Court). Addition on rent guest house/staff house - Held that - This issue stands concluded against respondent/assessee by the decision of the Apex Court in Britannia Industries Ltd. vs. C.I.T.(2005 (10) TMI 30 - SUPREME Court).

Summary

Issues:
1. Deletion of interest-free loan given to Andhra Pradesh Rayons Limited
2. Deduction of royalty on bamboo exploited
3. Addition of income from gross fees for management and technical services
4. Payment of rent for guest house/staff house

Analysis:

Deletion of Interest-Free Loan:
The Tribunal was questioned on sustaining the deletion of ?1,19,81,900 by the CIT (Appeals) concerning an interest-free loan to Andhra Pradesh Rayons Limited. The High Court referred to a previous case where similar issues were decided in favor of the respondent/assessee. Therefore, based on the earlier ruling, the High Court answered this issue in favor of the respondent/assessee and against the appellant/Revenue.

Deduction of Royalty on Bamboo Exploited:
The Tribunal was asked about allowing deduction of royalty on bamboo exploited at rates different from those specified in agreements with the Government of Maharashtra. The respondent/assessee cited previous court decisions that favored their position. The Revenue's counsel acknowledged that the issue was settled in a different case. Consequently, the High Court ruled in favor of the respondent/assessee and against the appellant/Revenue on this matter.

Addition of Income from Management Services:
The Tribunal was questioned regarding the deletion of ?48,09,964 related to income from gross fees for management and technical services. The respondent/assessee relied on specific court decisions that supported their stance. The High Court agreed with the respondent/assessee, citing relevant precedents, and ruled in their favor against the appellant/Revenue.

Payment of Rent for Guest House/Staff House:
The Tribunal was asked about the deletion of ?15,96,162 paid for rent of guest house/staff house. The respondent/assessee conceded that this issue was settled against them by a Supreme Court decision. Consequently, the High Court ruled in favor of the appellant/Revenue and against the respondent/assessee on this particular issue.

In conclusion, the High Court disposed of the reference, answering questions 1, 2, and 3 in favor of the respondent/assessee and question 4 in favor of the appellant/Revenue. No costs were awarded in this judgment.