Nutan Warehousing Co. Pvt. Ltd. v. Dy. Commissioner of Income-tax, Circle-2, Pune
[Citation -2014-LL-0813-87]

Citation 2014-LL-0813-87
Appellant Name Nutan Warehousing Co. Pvt. Ltd.
Respondent Name Dy. Commissioner of Income-tax, Circle-2, Pune
Court HIGH COURT OF BOMBAY
Relevant Act Income-tax
Date of Order 13/08/2014
Assessment Year 1997-98
Judgment View Judgment
Keyword Tags disallowance of interest • mortgage deed • term loan • error apparent on face of record
Bot Summary: Mr Naniwadekar submits that the two questions which have been framed in these Memo of Appeals are substantial questions of law. They read as under : Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in sustaining disallowance of interest u/s 43B, without appreciating the terms of the agreement between the parties and the character of the transaction in question Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in treating the loan received by the assessee as a term loan within the meaning of S.43B as it then stood, without taking into consideration either the agreement between the lender and the assessee or the surrounding circumstances and subsequent conduct of the parties, which clearly indicated that the loan not a term loan 4. With regard to the first question, the contention of Mr Naniwadekar is that the Tribunal as also the Commissioner have erroneously held that the terms of the sanction letter issued by the Bank would be decisive and if they are considered, the loan was a term loan. The clauses thereof would Uploaded on - 19/08/2014 Downloaded on - 18/04/2020 17:44:11 vrd 3 ITXA 439/12 indicate that the loan was a term loan but the stipulation was that at the end of four years, the liability to clear the said amount would arise and if that is not discharged, then the consequences under the mortgage deed would follow. The Tribunal in paragraph 7 of the order under challenge while confirming the finding of the Commissioner held that the loan was for a term. Such finding of fact being consistent with the material placed before the two Appellate Authorities, including the documents that we find that the first question cannot be termed as a substantial question of law. In these circumstances, neither of the questions can be termed as substantial questions of law.


vrd 1 ITXA 439/12 IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.439 OF 2012 WITH INCOME TAX APPEAL NO.665 OF 2012 Nutan Warehousing Co.Pvt.Ltd. Appellant v/s Dy. Commissioner of Income Tax, Circle 2, Pune Respondent Mr Mihir Naniwadekar for Appellant. Mr Vimal Gupta, Sr. Counsel with Ms Padma Divakar for Respondent. CORAM : S.C. DHARMADHIKARI AND B.P. COLABAWALLA JJ. DATE : 13TH AUGUST 2014. P.C. : 1. These Appeals are directed against order passed by Income Tax Appellate Tribunal, Pune 'B' Bench dated 4 th January 2012 in Appeal which was filed by Appellant Assessee. 2. Assessment Years are 1997 98 and 1998 99. Uploaded on - 19/08/2014 Downloaded on - 18/04/2020 17:44:11 vrd 2 ITXA 439/12 3. Mr Naniwadekar submits that two questions which have been framed in these Memo of Appeals are substantial questions of law. They read as under : (A) Whether on facts and in circumstances of case and in law, Tribunal was justified in sustaining disallowance of interest u/s 43B, without appreciating terms of agreement between parties and character of transaction in question ? (B) Whether on facts and in circumstances of case and in law, Tribunal was justified in treating loan received by assessee as term loan within meaning of S.43B as it then stood, without taking into consideration either agreement between lender and assessee or surrounding circumstances and subsequent conduct of parties, which clearly indicated that loan not term loan 4. With regard to first question, contention of Mr Naniwadekar is that Tribunal as also Commissioner have erroneously held that terms of sanction letter issued by Bank would be decisive and if they are considered, loan was term loan. Mr Naniwadekar submits that governing document was mortgage deed. clauses thereof would Uploaded on - 19/08/2014 Downloaded on - 18/04/2020 17:44:11 vrd 3 ITXA 439/12 indicate that loan was term loan but stipulation was that at end of four years, liability to clear said amount would arise and if that is not discharged, then consequences under mortgage deed would follow. Therefore, there was no question of rendering finding that contents of sanction letter would supersede or override mortgage deed either way. reference is made to paragraph 7 of order under challenge. 5. With regard to second question, Mr Naniwadekar submits that Explanation 3C which was inserted by Finance Act 2006 was not applicable and clause (d) of section 43B of Income Tax Act 1961 as it then stood was applicable provision. 6. With assistance of Mr Naniwadekar, we have perused concurrent findings rendered by Tribunal as also Commissioner. Tribunal in paragraph 7 of order under challenge while confirming finding of Commissioner held that loan was for term. That it was Uploaded on - 19/08/2014 Downloaded on - 18/04/2020 17:44:11 vrd 4 ITXA 439/12 secured by mortgage of assets and properties of Assessee borrower does not mean that clauses or terms and conditions incorporated in sanction letter can be ignored. This clearly shows that loan was for term and it was secured in manner set out by Deed. Such finding of fact being consistent with material placed before two Appellate Authorities, including documents that we find that first question cannot be termed as substantial question of law. 7. With regard to second question as well, we have perused section 43B(d) and Explanation C to relevant section. Mr Naniwadekar does not dispute that this Explanation has been brought into force with effect from 1 st January 1989. Then Tribunal did not commit any error in relying on same. In these circumstances, neither of questions can be termed as substantial questions of law. findings of facts and concurrently rendered are not vitiated by any error of law apparent on face of record or perverse so as to warrant Uploaded on - 19/08/2014 Downloaded on - 18/04/2020 17:44:11 vrd 5 ITXA 439/12 further interference in our appellate jurisdiction. appeals are devoid of any merit and are dismissed. No costs. (B.P. COLABAWALLA J.) (S.C. DHARMADHIKARI J.) Uploaded on - 19/08/2014 Downloaded on - 18/04/2020 17:44:11 Nutan Warehousing Co. Pvt. Ltd. v. Dy. Commissioner of Income-tax, Circle-2, Pune
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