O O C J Vs. MEHTA PVT LTD

JUDGEMENT

(1.) THE above appeal is filed by the appellant (Revenue) impugning the order dt. 14th Sept., 2000 passed by the Tribunal arising out of ITA No. 542/Mum/1997 for asst. yr. 1986 -87. The substantial question of law on which the appeal is admitted by this Court is as follows:

(2.) THE relevant facts arising in the present appeal are as under:

(3.) WE have heard the advocates for the Revenue as well as the assessee. They have reiterated their submissions made before the CIT(A) and the Tribunal. We do not agree with the finding of the AO that Clause 13 of the memorandum of articles of association is a comprehensive Clause and in view of that Clause Agrima cannot give any guarantee without security. We are of the view that according to Clause 13 of the object Clause Agrima could guarantee the performance of any contract or obligation/payment of money of or by any person or company or corporation. In addition to this, the said object Clause 13 also allows Agrima to secure any guarantee in such a manner as the company may think fit and in particular by the mortgage, pledge or other security upon all or on any other properties of the company. This would not mean that Agrima cannot give guarantee without security. In any event, it also appears that the Revenue has not pressed this issue before the Tribunal and has only highlighted the fact that the three companies were controlled and managed by the same group of persons.