2004 INSC 0266
                      SUPREME COURT OF INDIA

                      Motor General Finance Limited

                         Vs.

                      Commissioner of Income Tax

                      C.A.No.1479 of 2004

                      (N. Santosh Hegde and B. P. Singh JJ.)

                      25.02.2004

                      JUDGMENT

N. Santosh Hegde, J.

1. Heard learned counsel for the parties. Delay condoned. Leave granted.

2. The only question that arises for our consideration in this case is whether the amount

advanced by the appellant to its subsidiary in the relevant year was out of the profit earned

by the company for the said year or was from the funds borrowed by the appellant. In para.
6of the impugned judgment, the High Court has observed (see1) (page 452) :

"Pursuant to and in furtherance of the aforesaid direction, an opportunity was given to
the assessee to place additional material. The asses-see merely furnished the statement
of the deposits made in the bank account on those dates, on which the advance
amounting to Rs. 50 lakhs was made to the sister concern. It, however, despite the
direction did not furnish the copy of a bank statement to show as to whether there had
been a credit balance or a debit balance in the bank accounts on those dates. In this
situation, it was observed:

'If there was a debit balance, then it could safely be inferred that interest bearing
overdraft facility of the bank was utilised to make those advances. But the assessee
till date has not furnished any such statement. In view of this fact, the disallowance of
Rs. 10lakhs is to be sustained'." *

3. The High Court in the impugned judgment has observed that in spite of giving opportunity
to the appellant, it has not filed the necessary statement before the Commissioner of Income-
tax. It is primarily based on this finding of fact that the High Court dismissed the statutory
appeal filed by the appellant.

12001 Indlaw DEL 383

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