C I T Vs. DALMIA CEMENT BHARAT LTD

JUDGEMENT

(1.) THE following question of law has been referred to this Court for opinion by the Income Tax Appellate Tribunal (=i. T. A. T.), Delhi:

(2.) THE facts of the case on the basis of which the above question has been referred are that the assessee company M/s. Dalmiya Cement (Bharat)Limited manufactures and deals in cement and dead burnt magnesite. Its method of accounting is mercantile and the accounting year for the assessment years 1976-77 and 1977-78 ended on 31. 12. 1975 and 31. 12. 1976, respectively. The assessee company had advanced an interest free loan to the tune of Rs. 40,00,000/- to its 100% subsidiary company, namely, M/s. Srirangam Investment Company, Limited. The Income Tax Officer (=ito) noted from the accounts that the interest bearing borrowings from banks and public had increased during the year 1976-77 to Rs. 1,14,46,904/- and Rs. 68,16,000/-against Rs. 3,78,797/- and Rs. 53,81,000/-, respectively in the immediately preceding previous year. The ITO concluded that the additional loans had been raised by the assessee company to advance loan to its subsidiary company. Accordingly, Assessee Officer disallowed part of the interest amounting to rs. 2,26,973/- in respect of the claim of interest debited by the assessee for the year 1976-77 and Rs 3,70,392 in respect of the assessing year 1977-78. The order of the Assessing Officer was upheld by the C. I. T. (Appeals) wherein the view of the ITO was upheld holding that no interest is allowable for amount of moneys which have been loaned to the subsidiary company and consequently an appeal was preferred to the I. T. A. T by the assessee. The I. T. A. T. after discussing the rival contentions of the parties held as under:

(3.) BEFORE us the counsel for the revenue and the assessee on facts have raised same arguments as raised before the authorities below. The counsel for the assessee has taken us through a detailed chart filed by the assessee before the ITAT showing for different months such as 01. 01. 1975, 01. 05. 1975, 09. 04. 1975 etc. till end of the financial year to show as to how credits, bank balance, fix deposits from the public and so on which were available with the assessee company and as to how the loan which was advanced to the subsidiary company was not in lump sum of Rs. 40,00,000/-but consisted of advances at different dates of different amounts of rs. 1,80,000/-, 1,00,000/-, 1,20,000/- and so on and that on each dates of such loan, there was sufficient credit balance available with the assessee company, independent of loan from the banks, so as to give further loan to its subsidiary company. The counsel accordingly contended that it could not be said that the loans which are given to the subsidiary company have been diverted from the loan taken by the assessee company from its bank. The learned counsel further contended that this chart was not disputed by the revenue before the c. I. T. (Appeals) and was also accepted by the I. T. A. T. and duly considered before arriving at its findings of para 11 as stated above. The counsel of the assessee then relied upon the afore-stated para 11 of the judgment of the i. T. A. T which he contended is final, the tribunal being the final fact finding authority. The learned counsel for the assessee has placed strong reliance upon the various decisions; S. A. Builders Ltd. Vs. Commissioner of Income-Tax (Appeals) (2007) ITR 1 (SC), Commissioner of Income Tax Vs. Tin Box Co. (2003)ITR 637 (DB,delhi), K. Ravindranathan Nair Vs. Commissioner of Income Tax, (2001) 247 ITR 178 (SC) Sudarshan Silk Sarees Vs. CIT, (2008)300 ITR 205 to canvass the propositions that firstly the Tribunal is the final fact finding authority and the findings of the Tribunal as recorded in its para 11 of its judgment cannot be challenged by the revenue and secondly the counsel further contended that unless the revenue is able to show that the loans given to the subsidiary company are not for any individual use for any director or some such similar personal purpose which cannot be said to be a personal purpose, then, the loan is deemed to be given for the commercial expediency/purpose and cannot be questioned by the Assessing Authority.