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TMI Blog2016 (11) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... o TIMI Ltd. to the tune of ₹ 10,00,20,000/- but the CIT(A) has allowed the same in view of the law settled by the Mumbai High Court in case CIT Vs. Reliance Utilities and Power Ltd.[2009 (1) TMI 4 - BOMBAY HIGH COURT ] and Supreme Court in the case of S.A.Builders Ltd. V/s. CIT [2006 (12) TMI 82 - SUPREME COURT ] and Hero Cycles P. Ltd. Vs. Commissioner of Income Tax [2015 (11) TMI 1314 - SUPREME COURT OF INDIA]- Decided in favour of assessee Disallowance on property tax - non running business - Held that:- It is not in dispute that the assessee company can purchase the property for the business purpose. The important documents has been filed by the assessee company which lies at page 25 of the paper book in which the lesser MIDC has leased out the land to the lessee M/s. Asian Paints Ltd. and in view of the said receipt the assessee paid an amount of ₹ 60,87,581/- and assessee paid property tax to the tune of ₹ 60,87,581/- during the relevant assessment year which has been declined on the ground of that the assessee did not do the business. The receipt lies at page 25 of the paper book also speaks about the purpose in which the purpose has been written for fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed by assessing the total income to the tune of ₹ 242,04,36,965/-. Being not satisfied, the assessee filed an appeal before the CIT(A) who confirmed the said order. Subsequently the assessee as well as revenue were in the appeal in ITA No.5092/M/2007 and ITA No.5164/M/2007 wherein the case was remitted to the CIT(A) to decide the issue in view of the law settled in Supreme Court of India in the case of Goetze (India) Ltd., 284 ITR 323. Thereafter, the CIT(A) reconsidered the matter and disallowed an amount of ₹ 25,94,034/- being unadjusted balance in employees Account written off during the year under prior period expenditure. Therefore, the assessee has filed the present appeal before us. 4. We have heard the arguments advanced by the learned representative of the parties and perused the record. The assessee has raised the sole issue on account of non allowance of deduction on written off unadjusted balance in employees account of ₹ 25,94,034/- but at the time of argument the learned representative of the assessee did not press this ground, therefore this issue is decided against the assessee and in favour of the revenue. 5. In result the appeal fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est free loan to Pentasia Investmnets LTd. was for investing in a company manufacturing an important and vital ingredient / chemical used in the manufacture of paints which is the main business of the assessee, and but for the company law requirements assessee would have directly invested in the company. Moreover, if the assessee had not received supply of this vital chemical from Pentasia Chemicals, it would not have been able to manufacture paints and this would have affected its business of manufacture of paints. Moreover, Pentasia Investmnets Ltd. has already merged with the assessee with effect from 01.04.2002 as per the orders of Mumbai High Court and, therefore, the issue is not relevant for this year. It may be mentioned here that Assessing Officer has also deleted the disallowance of interest in respect of loan to P.I. Ltd. for A.Y.2000-01, 2001-02 and 2002-03. Keeping in view, the facts of the case I am of the opinion that the interest free loan of ₹ 5,89,30,000/- given by the assessee to Pentasia Investments Ltd. was for business purposes. 3.2.3 Assessee had given interest free loan of ₹ 6,00,00,000/- to its subsidiary Asian Paints Industrial Coatings Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-TIO:- 697-HC-DEL-IT) 5) J.K.Industires Ltd. Vs. CIT (Central) I, Mumbai (2011-TIOL-448-HC-Kol-IT) 3.2.5 Thus, assessee s appeal on this ground is allowed. 9. On appraisal of the above mentioned order, it is not in dispute that the company Pentasia Investment Ltd. technically engaged in business of manufacturing and supply of Pentaerithritol an important raw material in manufacture of paints. The Pentasia Investments Ltd. and Technical Instruments Mfg. Co. Ltd. and Asian Paints Industrial Coatings Ltd. subsidiary company and assessee company was merged vide Mumbai High Court order dated 27.10.2003. Subsidiary company and assessee company was merged vide Mumbai High Court order dated 27.10.2003. So far as the company of Pentasia Investments Ltd. is concerned the disallowance of interest in respect of loan to Pantasia Investments Ltd. for A.Y.2000-01, 2001-02 and 2002-03 the CIT(A) has arrived at this conclusion that the interest free loan to the tune of ₹ 5,89,30,000/- given by the assessee to Pentasia Investments Ltd. was for the business purpose. Accordingly, the assessee had given the interest free loan of ₹ 6,00,00,000/- to its subsidiary Asian Paints ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the decision in S.A.Builders Ltd. Vs. CIT reported in [288 ITR 1] needs reconsideration. 2. The appellant prays that the order of the ld. CIT(A) on the above ground be set aside and that of the Assessing Officer restored. The facts of the case are the same as mentioned above while deciding the appeal relating to the A.Y.2003-04 filed by the parties. However the figures are the different. ISSUE NO.1:- 11. This matter of controversy has already been adjudicated while deciding the appeal of the revenue for the A.Y.2003-04. The issue is the same which is in connection with disallowance of notional interest the tune of ₹ 1,02,83,000/-. This issue has already been decided in favour of the assessee against the revenue therefore this issue is also decided in favour of the assessee against the revenue in view of the terms as decided above while deciding the appeal of the revenue for the A.Y.2003-04. Accordingly this issue is decided in favour of the assessee against the revenue. ITA NO.3825/MUM/2012 (A.Y.2009-10):- 13. The assessee has raised the following grounds:- 1. The learned Commissioner of Income Tax (Appeals)-21 ( CIT (A) ) Mumbai e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative of the assessee has placed reliance on the law settled in CIT Vs. Ralliwolf Ltd. (1980) 121 ITR 262 (Bom.) and Sardar Sarovar Narmada Nigam Ltd. Vs. ACIT (2012) 138 ITD 203 (Ahd.) (SB) and Western India Vegetable Products Ltd. Vs. CIT (1954) 26 ITR 151 (Bom.) and CIT Vs. Saurashtra Cement and Chemical Industries Ltd. (1973) 91 ITR 170 (Guj.) 16. On the other hand learned representative of the department has strongly relied upon the finding of the CIT(A) in question. It is not in dispute that the assessee company was incorporated on 29.12.1955 and in this regard the certification of incorporation is on record lies at page 69 of the paper book. The Memorandum of Understanding (MOU) is also on record which lies at page 66 to 94 of the paper book. In the said MOU at serial no.28 the company could acquire the property for the business purpose which is hereby reproduced below:- 28. To acquire by purchase, lease or otherwise, for the purpose of the company any real or formal property, rights, privileges, and in particular any land, building rights, easements, licences, concessions, privileges, patent rights. 17. Therefore in the said circumstances, it is not in disp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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