2022 (2) TMI 942 - HC - Income Tax

Investments made in a subsidiary company - HELD THAT - Identical question arose for consideration in the assessee s own case for the assessment years 1992-93 and 1993-94 which were also considered by the tribunal by the consolidated order dated 29th October, 2003 which is impugned before us for the assessment year 1994-95. For the assessment year 1994-95, the assessee carried the matter in appeal before this Court 2014 (11) TMI 1255 - CALCUTTA HIGH COURT and by judgment the appeal was allowed. The same judgment was followed in the assessee s own case for the assessment year 1993-94. Thus, we find that there is no distinguishing factor in the case on hand for not applying the decisions of this Court rendered for the earlier assessment years which also challenged the very same impugned order. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of legal proposition regarding the source of funds for investments.
2. Justification of Assessing Officer's action on depreciation allowance.

Analysis:

Issue 1:
The appeal under Section 260A of the Income Tax Act, 1961 raised the question of whether the investments made by the assessee in a subsidiary company were funded from profits deposited in a mixed overdraft account or from the overdraft itself. The Court considered the argument that the Tribunal's finding on the source of funds for the investments was unreasonable and lacked evidence. The appellant's counsel contended that the profits and sale proceeds were deposited in the mixed overdraft account, challenging the Tribunal's conclusion. The Court noted that a similar issue had been addressed in the assessee's previous cases for the assessment years 1992-93 and 1993-94. The Tribunal's decision for the assessment year 1994-95 was challenged, and it was highlighted that previous judgments in the assessee's favor set a precedent. Consequently, the Court allowed the appeal, citing consistency with previous decisions and ruling in favor of the assessee.

Issue 2:
The second substantial question of law pertained to the Assessing Officer's treatment of depreciation allowance amounting to a significant sum. The appellant's senior counsel informed the Court that they were instructed not to press this question, leaving it unresolved. Therefore, the Court did not delve into this issue further, as per the appellant's decision. The focus remained on the first issue regarding the source of funds for investments, leading to the Court's decision in favor of the assessee based on precedents and consistency in judgments from previous cases.

This comprehensive analysis of the judgment from the Calcutta High Court highlights the legal interpretations and decisions made by the Court on the issues raised in the appeal under the Income Tax Act, 1961.