DIRECTOR OF IT Vs. BESIX KIER DABHOL SA

JUDGEMENT

(1.) THIS appeal by the revenue under Section of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') challenges an order dated 10 -11 -2010 of the Income Tax Appellate Tribunal (hereinafter referred to as the 'Tribunal') in ITA No. 4249/Mum./2007 relating to Assessment year 2002 -03. Being aggrieved, the revenue has formulated the following questions of law for the consideration by this Court.

(2.) THE appeal is admitted on Question (ii) and (iii). Re Question (i)

(3.) THE respondent -assessee is a company incorporated under the laws of Belgium. The sole business of the respondent -assessee is to carry out the project of construction of fuel jetty near Dabhol in India. The respondent -assessee had fully paid capital of 25.00 lacs (Belgium Francs) divided into 2500 shares of 1000 Belgium Francs each. This equity capital was divided in the ratio of 60:40 between the two joint venture partners N V Besix SA, Belgium and Kier International (Investment) Limited of U.K. The respondent assessee also borrowed from its shareholders in the same ratio as the equity share holding amount of Rs. 57.09 crores from N.A. Basix SA and Rs. 37.01 crores from Kier International Investment Limited. In the circumstances, the respondent had equity capital of Rs. 38.00 lacs and debt capital of Rs. 9410 lacs. Thus, debt equity ratio worked out is to 248:1.