What did the High Court hold?

The Tribunal's findings regarding the diversion of funds to sister concerns and their subsequent further diversion were pure findings of fact. No substantial question of law arose for consideration.

The assessee claimed interest on borrowed funds, but the Assessing Officer disallowed it, finding the funds were diverted to sister concerns. The Tribunal restored the Assessing Officer's order, finding the diversion was not for business exigencies.

What were the issues?

Whether the diversion of borrowed funds to sister concerns, which were not for business exigencies, justified the disallowance of interest payment. Whether the Tribunal's findings of fact were erroneous.

Gautam Cable Industries vs DCIT | Delhi High Court 2010

ITA Nos.1035/2009,147/2009&152/2009

Page No.1 of 3 THE HIGH COURT OF DELHI AT NEW DELHI

Judgment delivered on: 18.01.2010

+ ITA Nos. 1035/2007, 147/2009 & 152/2009

GAUTAM CABLE INDUSTRIES

… Appellant

- versus –

DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 9

... Respondent

Advocates who appeared in this case: For the Appellant : Mr K.R. Manjani with Mr Madhu Sudan Sahni For the Respondent : Ms Prem Lata Bansal with Ms Anshul Sharma

CORAM:- HON’BLE MR JUSTICE BADAR DURREZ AHMED HON’BLE MR JUSTICE SIDDHARTH MRIDUL

Whether Reporters of local papers may be allowed to see the judgment ?

To be referred to the Reporter or not ?

Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL) CM No.1569/2008 in ITA No.147/2008, 2601/2008 in ITA 152/2008

Delay in filing the appeal is condoned. ITA Nos. 1035/2007, 147/2009 & 152/2009 1. These three appeals arise out of the common order dated 02.06.2006 passed by the Income-tax Appellate Tribunal in ITA Nos. 40, 1391 and 3319/Del/2001-02 pertaining to the assessment years 1997-98, 1998-99 and 1999-2000. The appellant / assessee is aggrieved by the

ITA Nos.1035/2009,147/2009&152/2009

Page No.2 of 3 impugned order passed by the Tribunal in view of the fact that the Tribunal has set aside the order of the Commissioner of Income-Tax (Appeals) and restored the order of the Assessing Officer who disallowed the claim of interest payment made by the assessee to the bank in respect of the borrowed funds on the ground that the said borrowed funds were diverted to sister concerns.

The Assessing Officer as well as the Income-tax Appellate Tribunal came to the definite conclusion that there was a diversion of funds which had been borrowed by the assessee from banks to the sister concerns, namely, Govan Industrial Corporation and Anilmaa Association, which were not covered within the scope of the commercial expediency or business exigencies of the assessee. A finding was also recorded that the Assessing Officer had examined not only the books of the assessee, but also the assessment orders and other records of the sister concerns, namely, Govan Industrial Corporation and Anilmaa Association. After such an examination, the Assessing Officer had come to a definite finding that the group concerns had not utilized the funds for the purposes of their business, but had instead diverted the same further to individuals / family members of the group.

We have seen the impugned order as well as have heard the counsel for the parties and are of the view that the findings returned by the Tribunal are in the nature of pure findings of fact. There is no substantial

ITA Nos.1035/2009,147/2009&152/2009

Page No.3 of 3 question of law which arises for our consideration. Consequently, we refrain from admitting these appeals. The appeals are dismissed.

BADAR DURREZ AHMED, J

SIDDHARTH MRIDUL, J JANUARY 18, 2010 dutt

GAUTAM CABLE INDUSTRIES vs. DY. COMMISSIONER OF INCOME TAX

What did the High Court hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

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