HIGH COURT OF BOMBAY
INCOME TAX APPEAL NO.110 of 2009
CIT Vs. M/s. Delite Enterprises
DATED: 26th February, 2009
Revenue is in appeal on the following questions:-
“Whether on the facts and in the circumstance of the case and in law the Hon’ble Tribunal was right in deleting the disallowance made by the Assessing Officer of interest paid by the Assessee Company on borrowed funds amounting to Rs.241.10 lakhs overlooking the fact that the borrowed funds were used by the Assessee Company to invest in the Capital of another Partnership Firm and since profits derived by the Assessee Company from a Partnership firm were exempt from tax u/s.10(2A) of the Income-tax Act, the interest expense related to such tax free profits is to be disallowed u/s.14A of the Income Tax Act?
(B) Whether on the facts and in the circumstance of the case and in law the Hon’ble Tribunal was right in holding that the Assessing Officer cannot consider notional interest on deposit received by the Assessee Company while arriving at the fair market value u/s.23(1) (a) of the Income-tax Act?”
2. In so far as Question (A) is concerned, on facts we find that there is no profit for the relevant assessment year. Hence the question as framed would not arise.
3. In so far as Question (B) is concerned, the Tribunal followed the judgment of this Court in J.K. Investors (Bom) Ltd. 248 ITR 723 (Bom.). Nothing has been brought to our notice that the ratio of this judgment would not be applicable. In the light of that the said question would not arise.
Consequently Appeal dismissed.
(R.S.MOHITE, J.) (F.I.REBELLO,J.)
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ITAT JUDGMENT RELATED TO ABOVE IS AS FOLLOWS:-
IN THE ITAT MUMBAI BENCH ‘I’
Delite Enterprises (P.) Ltd.
v/s.
Income-tax Officer, Wd. 3(1)(2), Mumbai
J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND V. DURGA RAO, JUDICIAL MEMBER
