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TMI Blog2021 (11) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed on 10.03.2017 by the Income Tax Appellate Tribunal in ITA Nos. 786 and 2073/Kol/2013 for the Assessment Year 2008-09. The assessee has raised the following substantial questions of law for consideration: (a) Whether the Tribunal was justified in law in upholding the invocation of rule 8D of the Income Tax Rules, 1962 in the appellant's case for the purpose of disallowance under section 14A of the Income Tax Act, 1961 and its purported findings in that behalf, including that the Assessing Officer had recorded his dissatisfaction with regard to the appellant's claim or that the appellant had not furnished any materials/evidence to show that no borrowed funds were utilised in making the investments, are arbitrary, unreasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals before the Tribunal. The Tribunal dismissed the assessee's appeal and the Revenue's appeal was allowed. The sheet anchor of the argument submitted by the assessee before the Tribunal was by placing reliance on the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax v. Saurashtra Cement Ltd. reported in (2010) 325 ITR 422 (SC) as well as the decision of the Kolkata Bench of the Tribunal in the case of DCIT v. Xpro India Ltd. in ITA 214/Kol/2011 and ACIT v. RDS Construction Pvt. Ltd. in ITA 377 to 383/PN/2013. The Tribunal while interpreting the decision in Saurashtra Cement Ltd. (supra) went into the factual aspect and stated that in the said case, the compensation was paid for late delivery of the machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in the Hon'ble Supreme Court as well as the other decisions which have been referred to by the Hon'ble Supreme Court. In fact one such decision which was relied on by the assessee in the said case was that of the High Court of Madras in E.I.D. Parry Ltd. v. CIT [1998] 233 ITR 335. For better appreciation, we quote paragraphs 11 and 12 of the decision in Saurashtra Cement Ltd. : 11. The question whether a particular receipt is capital or revenue has frequently engaged the attention of the courts but it has not been possible to lay down any single criterion as decisive in the determination of the question. Time and again, it has been reiterated that answer to the question must ultimately depend on the facts of a particular case, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract of agency is a capital or a revenue receipt, echoing the views expressed in Rai Bahadur Jairam Valji [1959] 35 ITR 148(SC) and analysing numerous judgments on the point, this court laid down the following broad principle, which may be taken into account in reaching a decision on the issue (page 282): "Where on a consideration of the circumstances, payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business, nor deprive him of what in substance is his source of income, termination of the contract being a normal incident of the business, and such cancellation leaves him free to carry on his trade (freed from the contract terminated) the receipt is revenue : ..... X X X X Extracts X X X X X X X X Extracts X X X X
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