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TMI Blog2025 (4) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the company relates to the promotion, establishment and financing of State Public Sector Enterprises engaged in electronics. One of the measures of promotion, was by way of investing in such company. 2. In the financial year in relation to the Assessment Year in question, the appellant had invested in a total of 39 joint ventures of which four companies had not performed well. The expenditure in the aforesaid four companies had been written of and the question before us relates to whether the writing off of the investments would constitute an allowable deduction under the provisions of the Income tax Act 1961 (Act). 3. The substantial questions of law that have been admitted on 22.11.2012 are as follows: '1.Whether the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .01.2006. 5. In the course of assessment, the assessing authority considered the write off of a sum of Rs.2,04,90,274/-. This amount represented investment by ELCOT in four companies being (i) Elcont Trident Automation Ltd (ii) Madras Hightech Circuits Ltd (iii) Satta Information India Ltd and (iv) Encore Infosys Ltd (companies in question). 6. On behalf of the appellant, it was explained that the investments, though in the nature of an advance, were accounted for as equity or working capital. In respect of the four companies in question, the ventures were not successful and hence the investment had been completely eroded. 7. Since one of the main objects of the Appellant, per its Memorandum of Association (MOA) related to promotion of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal filed at the instance of the Revenue, noticing that for the earlier year, that is, AY 2001-02, the identical disallowance had been made and the Tribunal had decided the matter in favour of the Revenue. 11. However, both learned counsel draw the attention of the Court to the position that the order of the Tribunal for AY 2001-02 has, in fact, been reversed by this Court in a decision reported in 479 ITR 283 in the case of Electronic Corporation of Tamilnadu Limited v. Deputy Commissioner of Income tax, Company-II(I), Chennai. In that order, the Court refers to its earlier decision in the case of CIT v. Tamil Nadu Industrial Investment Corporation (394 ITR 255) which turns on identical facts and legal position. 12. In the latter case as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Tamil Nadu is no different from the purpose for which TIIC and TIDCO were established. Therefore, the CIT(A) was fully justified in relying upon the decision in the case of TIDCO. The Tribunal relied on a decision in the case of R. Chidambaranatha Mudaliar (supra). We find that the reliance placed on the decision is thoroughly misconceived as in the said case, the loss was under different connotation namely with regard to Section 45 of the Act. Furthermore, in the said case, the head of income was never in dispute. Therefore, the Tribunal erred in relying upon the decision in the case of R. Chidambaranatha Mudaliar. Thus, for all the above reasons, the order passed by the Tribunal reversing the order passed by the CIT(A) is not sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be available to an equity share holder normally under Company law. It is in light of these factual findings that the CIT (A) held that the advance towards equity was not a mere investment, but a business venture. 18. In reversing the order of the CIT(A), the Tribunal has merely followed its order for the previous year which has been reversed by this Court. 19. Reliance by the revenue on a judgment of the Supreme Court in the case of Twenty First Century Management Services Ltd. v. Income Tax Officer (OSD), Chennai and the Delhi High Court in the case of ICS Systems (P.) Ltd. v. Commissioner of Income-tax (411 ITR 619) is of no avail as those cases turn on facts that are different from the present. 20. The Court has upheld, in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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