COMMISSIONER OF INCOME TAX Vs. COCHIN REFINERIES LIMITED

JUDGEMENT

(1.) Two questions have been referred to this Court under S.256(1) of the Income Tax Act, 1961, by the Income Tax Appellate Tribunal, Cochin Bench, which are said to arise from an order of the Tribunal disposing of the appeals filed by the assessee, Cochin Refineries Ltd., Ambalamugal and the department for the assessment year 197172. The two questions are

(2.) At the outset itself we might state that we answer question No. 2 against the assessee and in favour of the revenue in view of the decision of this Court in regard to the same assessee in respect of the assessment year 1970-71 when the same question was referred to this Court in I.T.R. Nos. 71 and 72 of 1977. This Court said there [the decision is reported in C.I. T. v. Cochin Refineries Ltd. ( 1982 (135) ITR 278 )]:

(3.) We may now refer to the relevant facts necessary for consideration of the second question. The assessee is a Public Limited Company in which the Government of India is a shareholder. The assessee had entered into agreements with financiers in the United States called Loan and Notes purchase agreements on 1st July, 1964 and on 31st December, 1967. The agreement on 1st July, 1964 was with from different financiers. The agreement in 1967 was with Phillips Petroleum International Corporation. According to the agreement of 1964 the assessee Company will authorise issuance and sale of 12 million U.S. dollars as 5 3/4 per cent secured Notes series A and the borrowing of 6 million U.S. dollars at the same rate but known as Secured Notes Series B. The notes were to be issued and secured by a deed of trust and mortgage, dated 1st July, 1964, the mortgage being between the Company and the First National City Bank as the Trustee and the creditors. The notes would be dated, should mature and should bear interest which shall be payable on such terms and provisions as provided in the mortgage deed and guaranteed by the Government of India in pursuance of the terms of the guaranteed agreements, dated 1st July, 1964. The Controller of Capital Issues has consented to the issue. It is specifically defined in the agreement that the term "Notes" shall mean any note authenticated and delivered under the said indenture, it being the intention that the expression shall have the same meaning as "debentures" under Indian Law.