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TMI Blog2020 (11) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... antial shares and we also notice that substantial portion of their commercial activities are sourced through the subsidiary companies. These investments made by the assessee will fall within the term business expediency /commercial expediency expressed by the Hon ble Apex Court in its landmark judgement of S. A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] . Therefore, the investment made by the assessee are for its commercial purposes hence the interest expenditure borne by the assessee for the investment made by the assessee on its subsidiary company are allowable expenditure under section 37(1) of the Act. Therefore, we are inclined to allow the grounds raised by the Assessee. Accordingly, grounds raised by the assessee are allowed. - I.T.A. No. 588/Mum/2019 And Cross Objection No. 192/Mum/2019, I.T.A. No. 937/Mum/2019 - - - Dated:- 15-6-2020 - Shri Pawan Singh, JM And Shri S. Rifaur Rahman, AM For the Appellant : Shri Yogesh Thar, AR For the Respondent : Shri Simi Samant, DR ORDER PER S. RIFAUR RAHMAN (ACCOUNTANT MEMBER): The present two appeal and one CO filed by the assessee and revenue against the order of Commissioner of Income Tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were in its associate companies, Chennai network infrastructure Ltd (CNIL) of ₹ 1637 crores and GTL infrastructure Ltd of ₹ 291.23Crores. The CNIL and GIL major contributor to the revenue of the assessee. The assessee received substantial percentage of revenue from GIL and CNIL. He further submitted that CNIL is engaged in the business of providing shareable infrastructure facilities on Build, Own and Operate basis for diverse range of customers operating in the telecom sector. He further submitted that CNIL also owns a passive infrastructure undertaking consisting of towers. The investment in CNIL would also help to increase the company s revenue by providing operations and maintenance services for Passive Telecom Infrastructure Undertakings. Further assessee submitted that the funds invested in shares of GIL and CNIL were used for the purpose of business. The assessee relied on the decision of the Supreme Court in the case of S. A. Builders versus CIT in 288 ITR 1. Further assessee contended that the purpose for which borrowing is utilised by the assessee, the purpose should satisfy the test of commercial expediency. The assessee submitted that the borrowed funds we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the above order, assessee is in appeal before us raising the grounds of appeal and also filed additional ground of appeal. 9. Since the main grounds are inter-related and inter-connected, therefore disposed of by the consolidated order. In respect of additional grounds, all the relevant information are already available in the record, therefore these are legal in nature. Accordingly, additional grounds raised by the assessee are accepted for consideration of adjudication. 10. Before us, Ld. AR submitted a written submission and also argued the content of the written submissions. For the sake of clarity, it is reproduced Below: 2.2.1 The Appellant, a part of Global Group, is a diversified technology and Infrastructure services Company focused on Telecom and Power. The Group Holding structure was submitted during the course of hearing and is attached herewith as Annexure - II. 2.2.2 In the telecom segment, the Appellant is an integrated Network Services Provider (NSP) engaged in activities like Network, Planning Design and Professional Services, Network Deployment, Network Operations Maintenance, Energy Management and Power Management. 2.2.3 There were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ergy Management and Power Management services provided by the Appellant to GIL and CNIL. 2.2.8 From the foregoing facts, it is evident that the investment was clearly made with a commercial rationale in order to boost the Appellant's own revenues and even though purportedly borrowings were utilised for such investments, they have only resulted in enhancing the revenues of the Company. 2.2.9 The Appellant would like to bring attention to section 36(l)(iii) of the Act, which reads as under: 36(1) - The deductions provided for in the folio-wing clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28:- (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession : 2.2.10 Section 36(l)(iii) of the Act envisages the fulfilment of the following three conditions before interest can be allowed as a deduction:- 1. There should be a borrowing of capital; 2. Capital must have been borrowed for the purpose of business and profession and 3. Interest should have been paid or payable in respect thereof '2.2.11 In this regard, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies, CNIL was a public limited company. The Appellant also explained it's business and the business of GIL as well as CNIL and how the same were intrinsically linked to each other. Both GIL and CNIL are in the business of providing passive infrastructure to telecom towers whereas the Appellant is in the business of providing Operations and Maintenance Services for Passive Telecom Infrastructure Undertakings. The Appellant had explained that both CNIL and GIL are major contributors to the revenue of the company and had contributed to 23% of the total revenue of the company for the year under consideration. A chart reflecting the growth in revenues in subsequent years was also filed before the Hon 'ble Bench. The income from the CNIL as well as GIL was reflected under Revenue from Energy Management Business in the financials of the Appellant at Pg 20 of the FPB. It is pertinent to note that out of the total revenue of ₹ 2171 crores in the year under consideration, Revenue from Energy Management Business accounted for 1029.50 crores out of which 517 crores were contributed by CNIL and GIL. Therefore, CNIL and GIL have contributed to 50% out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which holding company controls the majors shares as well as controls composition of directors. Therefore, we can say that the companies GIL and CNIL are subsidiary companies, which clearly indicates that the investment made by the assessee company in other sister concerns rather we can say subsidiary companies are meant to be for commercial expediency and commercial necessity. Therefore, in our considered view the investment made by the assessee in these companies are for commercial expediency and we also note that apart from it is holding substantial shares and we also notice that substantial portion of their commercial activities are sourced through the subsidiary companies. Therefore, it is a composite investment decision for the benefit of the overall group concerns. In our view, these investments made by the assessee will fall within the term business expediency /commercial expediency expressed by the Hon ble Apex Court in its landmark judgement of S. A. Builders (supra). Therefore, the investment made by the assessee are for its commercial purposes hence the interest expenditure borne by the assessee for the investment made by the assessee on its subsidiary company are allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by excluding the days for which the lockdown announced by the Government was in force. The relevant observations of this tribunal in the said binding precedent are as under:- 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners :- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c ) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating time for disposal of matters made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020, held that directed while calculating the time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point ..... X X X X Extracts X X X X X X X X Extracts X X X X
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