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2019 (10) TMI 760 - BOMBAY HIGH COURTTP Adjustment - ALP of the guarantee commission charges provided by the Respondent Co. - tribunal direction that the money advanced to the AE as share application money is not to be considered as loan - HELD THAT:- Issue as concluded against Revenue and in favour of Respondent-assessee in the Respondent’s own case [2018 (9) TMI 293 - BOMBAY HIGH COURT] Disallowance u/s 36(1)(iii) - whether the acquisition of business by way of investing into shares of that company through either Special Purpose Vehicle or directly cannot be considered to be ordinary event of the business and therefore, cannot be termed as expenditure incurred for the purpose of assessee’s business, which is providing ITES services?’ - HELD THAT:- As held in SRISHTI SECURITIES PVT. LTD. [2009 (1) TMI 408 - BOMBAY HIGH COURT] where an assessee claims deduction of interest paid on capital borrowed, all that an assessee has to show is that the borrowed funds were used for business purpose and if so then interest will have to be allowed as a deduction. The submission on behalf of the Revenue that the Petitioner is in the business of BPO and Call Centre activities and not in the business of investment means the prime business of the assessee is of running BPO and Call Centres and as recorded by the Tribunal the entire funds were borrowed so as to expand the business activities of BPO and Call Centres in Canada by acquiring a Canadian Company. Thus the loan was taken for the purpose of business. This is a finding of fact which has not been shown to be perverse. The expansion of ones activities in Canada would require acquisition of a Company by purchasing shares therein so as to expand the assessee's business. The object of the expenditure clearly is for the purpose of the business and therefore the interest incurred on the funds borrowed for investment in M/s.Minacs Canada has to be allowed as a deduction under section 36 (1)(iii) of the Act. So far as the finance expenditure is concerned, it would follow the allowing of interest expenditure. This expenditure is incurred in respect of the above loan taken for purpose of business and allowable u/s 36(1)(iii)
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