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2013 (7) TMI 118 - BOMBAY HIGH COURTDeletion of disallowance - deduction on account of interest paid - investment in mutual funds - Held that:- investment in mutual funds was made by the Respondent-assessee out of its own funds and not out of interest bearing borrowed funds - Entire borrowed funds was utilized to repay the loan taken from Oil India Development Board so as to take advantage of lesser rate of interest - There was no borrowed funds available with the Respondent-assessee to be invested in mutual funds - When sufficient interest free funds were available with the assessee, the presumption has to be that investment was made out of such interest free funds - There is no requirement under the law that an assessee should have separate account in respect of non interest bearing funds from that of interest bearing funds to establish that the investments have been made out of its own funds - Following decision of CIT vs. Reliance Utility and Powers Limited [2009 (1) TMI 4 - HIGH COURT BOMBAY] - Decided against revenue. Disallowance of expenditure - prior period expenditure - mercantile system of accounting - Held that:- liability in respect of work/services rendered in earlier year was crystallized only on receipt of the bill in the current assessment year - Moreover, the method adopted by the respondent assesses has been accepted by the revenue for the earlier assessment year and also while accounting for the income earned in respect of the work done in earlier years - In the circumstances, the Revenue is required to adopt consistent approach and allow the expenditure which was crystallized during the assessment year under consideration as done in the earlier years - Decided against revenue.
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