Law:

Section:

Section 10(15) of the Income-tax Act, 1961 - Exemption - Interest payable by specified entities - Assessee raised External Commercial Borrowings (ECB) under loan agreement approved by Government as required under section 10(15)(iv)(f) to finance its projects - Utilisation of ECB funds for specified end-use is one of essential terms of ECB approval for availing relevant exemption - However, ECB proceeds had not been substantially utilised and had instead been retained abroad - Therefore, Government cancelled exemption granted under section 10(15)(iv)(f) - Whether question of payment of any interest being exempt under section 10(15)(iv)(f) is wholly dependent upon fulfilment of contingencies specified therein - Held, yes - Whether it could be said that instant case was a case where Central Government had interfered with quasi-judicial function of assessing authority or appellate authority - Held, no - Whether contention of petitioner that grant of exemption under that section was not conditional upon any particular end- use that proceeds had to be put to or even conditional on proceeds being utilised for approved end-use, was contrary to grant of such approvals - Held, yes - Whether borrowings were required to be utilised for specified industrial purposes and since these were not so utilised, withdrawal of approval for exemption was justified - Held, yes FACTS The petitioner was a public limited company and it carried on business of manufacturing petrochemicals. It sought permission to raise External Commercial Borrowings (ECBs) to finance its projects. It filed an application before the second respondent for approval of the Government for loan agreement as required under section 10(15)(iv)( f) and that 'in principle' approval was granted. Thus, exemption had been granted in terms of section 10(15)(iv)( f). The petitioner requested that the expenditure incurred by it prior to such approval should be treated as part utilisation of ECB proceeds. In that regard, the second respondent asked the petitioner to submit documentary evidence supported by auditors' certificate indicating that the expenditure had been incurred on the items for which ECB was proposed and that…

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