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TMI Blog2011 (7) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- 15-7-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J. P. Khaitan, Mr. Sanjay Bhowmick, Miss. D. Saha. For the Respondent: Mr. S. N. Dutta, Mrs. Soma Chatterjee. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax ( Act ) is at the instance of an assessee and is directed against order dated April 15, 2004 passed by the Income-tax Appellate Tribunal, A Bench, Kolkata, in Income-tax Appeal bearing ITA No.1593(Kol.)/2003 for the Assessment Year 1996-97 and thereby dismissing the appeal preferred by the assessee. Being dissatisfied, the assessee has come up with the present appeal. The facts leading to the filing of this appeal may be summed up thus: a) The appellant is a public limited liability company within the meaning of the Companies Act, 1956 and the present appeal arises out of the assessment of the appellant for the Assessment Year 1996-97 for which the relevant previous year was the financial year ended on March 31, 1996. b) During the previous year ending on March 31, 1996, the appellant s Managing Director travelled overseas to Argentina, Brazil, Cuba, Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er providing for taxation and dividend amounted to Rs.30.37 crore and the said interest-free loans of Rs.7.30 crore were given out of the said internal accruals of the appellant. The Assessing Officer, however, by order dated March 26, 1999 disallowed the interest expenditure of Rs.59,32,575/- on the assumption that the interest-free loans to the subsidiaries were made by the appellant out of the borrowed funds. g) Being dissatisfied, the appellant preferred an appeal before the Commissioner of Income-tax (Appeals) and in course of hearing of the appeal, the Commissioner of Income-tax (Appeals) required the appellant to work out the interest for the period from the date of clearance of the cheques given to the subsidiaries up to the date when sufficient sale proceeds were deposited in the cash credit accounts to cover the amount of the interest-free loans. h) Although the appellant contended that the profit was far in excess of the interest-free loans given to the subsidiaries and that no part of the borrowed money was utilized for giving the loans out of the composite cash credit accounts in which all sale proceeds and income were deposited and out of which all expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns without charging any interest provided it is proved that the assessee had sufficient profit exceeding the amount advanced on loan: 1) S. A. Builders Ltd Vs. C.I.T and another reported in (2007) 288 ITR 1 (SC); 2) British Paints (India) Ltd. Vs. C.I. T reported in (1991) 190 I.T.R. 196 (CAL); 3) Woolcombers of India Ltd. Vs. CIT (central), Calcutta reported in (1982) 134 I.T.R 219(CAL); 4) Alkali and Chemical Corporation of India Ltd. vs. C.I.T reported in (1986) 161 I.T. R 820 (CAL). Mr. Dutt, the learned Counsel appearing on behalf of the Revenue, has, on the other hand, supported the order passed by the Tribunal and at the same time taken a preliminary objection as to the maintainability of this appeal on the ground that the CIT (Appeals) passed the order on the basis of suggestion given by the assessee and as such, the said order was a consent order and no appeal lay against such order before the Tribunal. According to Mr. Dutt, we should dismiss this appeal on that ground alone. Therefore, the first question that arises for consideration in this appeal is whether the order passed by the CIT (Appeals) reducing the addition to Rs. 27,200/- was based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pparent that the appellant company had always comfortable cash position in the form of profit for making advances to its subsidiaries and sister concerns. He stated that all the cash credit overdraft accounts of the banks and its sale proceed contain element of profits after providing for taxation, interest and other over heads. However, the A/R argued that at best an amount of Rs. 27,220/- can be disallowed in view of the fact that for certain periods debit balances were there in the account. From the aforesaid recording of submission, it is clear that there was no admission of the appellant of the liability but an alternative submission was made that at the most, the amount of Rs.27, 220/- could be disallowed. Thus, an alternative submission that at the most, the said amount might be disallowed if the main contention that entire amount should be deducted was not accepted cannot be said to be an admission on a question of fact. It is now settled law that if two alternative reliefs are claimed and the Court grants the alternative one by rejecting the first prayer, a litigant has a right to prefer an appeal for grant of the main relief. For instance, in a suit for specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e loan to its sister concerns without charging any interest because it is proved that the assessee had sufficient profit exceeding the amount advanced on loan. As pointed out by a Division Bench decision of this court in the case of Woolcombers of India Ltd Vs. CIT (Appeals), Central Calcutta (supra), in a case where the assessee has overdraft account in the bank and the entire profits in the relevant year were deposited in the said account which was far exceeding the amount of advance tax liability and the money was withdrawn both for business purpose and payment of advance tax, there is a presumption that advance tax was paid out of profits and not out of overdraft account and disallowance of interest on overdraft account as being relatable to payment of advance tax was not justified. The same view has been taken in the case of British Paints (India) Ltd (supra) by another Division Bench of this Court. In the case before us, we find that the opening balance of such interestfree loans to the subsidiaries for the previous year ending on March 31, 1996 amounted to Rs.1 crore. During the previous year ended on March 31, 1996, the appellant advanced a further sum aggregating to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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