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Showing 201 to 220 of 926 Records
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2011 (8) TMI 1173 - MADRAS HIGH COURT
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... ... ..... rder. 21.This contention of the learned counsel for the State, again deserves to be noticed to be rejected, as the Honourable Supreme Court, in the case of Commissioner of C.EX., Bangalore vs. Karnataka Agro Chemicals, 2008(227)E.L.T.12(S.C.), has been pleased to lay down, that is generic sense "micro-nutrients" are also a kind of fertilizer, in the functional sense. Though, in the said case, it was held that it was not be so treated for the purposes of Central Excise Act, in view of its exclusion under Excise Act. Whereas in the present case, it is not in dispute that the product was sold and exported under HS CODE 3105.90, which deals with the fertilizer. 22.It is also well settled that if two interpretations are possible, in that case, the one favouring the assess is to be followed. 23.For the reasons stated, all the writ petitions are allowed, and impugned orders in all the writ petitions are set aside. 24.Connected Miscellaneous Petitions are closed. No costs.
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2011 (8) TMI 1172 - ITAT MUMBAI
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... ... ..... ent angle. Suppose the assessee had not revised the return at all and no loss was shown in the original return due to some mistake but the AO in the assessment under section 143(3) is required to compute income or loss correctly. Once the loss has been determined by the AO under section 143(3), it cannot be said that the loss cannot be allowed to be carried forward when return has been filed within time allowed under section 139(1). We are therefore of the view that loss is required to be carried forward. This view is also supported by the decision of the Tribunal in case of Ramesh R. Shah vs. ACIT in ITA No.4312/Mum/2009 (supra), in which under identical circumstances loss arising from sale of shares of M/s. Phlox Pharma Ltd. has been allowed to be carried forward. We therefore, set aside the order of the CIT(A) and allow the claim of the assessee to carry forward the loss. 5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 17.8.2011.
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2011 (8) TMI 1171 - ITAT DELHI
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... ... ..... els have fairly agreed to, adhering to the doctrine of staire decises, we uphold the order of the Ld. Commissioner of Income Tax (Appeals) and decided the issue in favour of the assessee. ” o p /o p 7. Since the facts and the documents involved in the appeals before us are the same as referred to in the decision of DCIT Vs. M/s. Indication Instruments Ltd. (supra) to which the ld. Sr. DR had fairly agreed, respectfully following the decision of the ITAT in the case of DCIT Vs. M/s. Indication Instruments Ltd. (supra) it is held that in the absence of any material brought on record by the assessing officer, the addition cannot be made merely on the basis of entries recorded on the paper found during the course of search at the place of a third party. We, therefore, decide both the appeals in favour of the assessee. o p /o p 8. In the result, both the appeals filed by the assessee are allowed. o p /o p The order pronounced in the open court on 05th August, 2011. o p /o p
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2011 (8) TMI 1170 - ITAT CHENNAI
Difference with ALP in respect of transactions with AEs - Costing Method adopted by AE's - The assessee-company has many ‘Associated Enterprises’ (AEs) with whom it has ‘international transactions' - The assessee-company has revenue billings with 2 AEs only upon which TPO has reproduced the working given by the assessee company of the profit margin in the case of transactions with those two AEs in which there is revenue billing and also with non-AEs.
HELD THAT:- We are of the considered opinion that the majority view adopted by the TPO has to be reversed and the view taken by the single member of the DRP has to be upheld being found by us to be correct as per law. In our opinion, the majority view, that the internal comparables are reliable than external comparables, which gives a more precise computation of ALP is a wrong inference based on misconception of facts because the assessee has considered transactions of only with two AE's as compared with the non-AEs. There is no dispute in connection with the method of determination of AlP in applying TNMM in respect of transactions with AEs because the MAM and TNMM adopted by the assessee have been accepted by the TPO.
TPO is not correct in observing that the transactions with AE at 40% and transactions with non-AEs at 2.44% do not reflect the true market conditions. She is not correct in her observation that the costs adopted by the assessee-company in arriving at the net margin of its transactions with its AEs and non-AEs needs to be rejected since the cost work is skewed(doctored). In our opinion, the assesseecompany has given proper explanation for the basis of costing adopted by the AE. There is no material on which the TPO has rested her above observation.
We are not in agreement with the ld. CIT/DR when he submits that the assessee-company is not correct in splitting its results to suit its convenience. It is not a case of convenience, the assessee company is undeniably having revenue billing with only two AEs. The decision in the case of PANASONIC INDIA PVT. LTD. VERSUS ITO [2010 (9) TMI 682 - ITAT, DELHI], as suggested by the ld. CIT/DR, would not apply here. The simple reason being that the facts of that case are entirely different and distinguishable.
Hence, with the force of the principle laid down in the above decisions regarding the scope and application of TNMM method fully support the assessee’s contention. This issue is, therefore, allowed in favour of the assessee and against the Revenue.
Interest on Advances made to AE's - The assessee-company had paid some amount to two of its subsidiaries as advance during the financial year but it has not charged any interest from both the transactions. AO invoked the interest. The ld.AR has assailed the jurisdiction of the Assessing Officer to touch this issue of charging interest as it was not a part of DRP’s directions.- HELD THAT:- We hold that the Assessing Officer has jurisdiction to consider this issue, as per law and as per the majority view (DRP view). These advances have been made on account of commercial expediency only as has been claimed by the assessee-company. The Assessing Officer has not disproved the reasons given in this regard. Therefore, the cumulative effect of these factual matrix is that this interest has been wrongly charged. As a result, we allow this issue in favour of the assessee.
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2011 (8) TMI 1169 - ITAT MUMBAI
Assessment of income - business center income - income from house property or business income Held that:- The property can be used only for a specific purpose i.e., I.T. operation and the assessee has provided complex service facilities and infrastructure for operating such business and on this factual matrix, we uphold the contention of the assessee that the income in question should be assessed under the head “Income From Business & Profession”.
Claim for deduction under section 80IA(4)(iii) computation - Held that:- Assessing Officer is directed to allow the claim of expenses as the disallowance was made only on the ground that the income is assessable under the head “House Property”. Consequent to our decision in ground no.1, we direct the Assessing Officer to allow both the expenditure claimed as well as the claim for deduction under section 80IA(4)(iii). Consequently, we set aside the order passed by the Commissioner (Appeals) and allow the ground no.2 and 3 raised by the assessee.
As the income in question is assessable under the head “Income From Business”, the addition made under section 23(1)(a) is to be necessarily deleted
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2011 (8) TMI 1168 - ITAT JAIPUR
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Deduction u/s 80IA(4) - Retrospective Effect of Explantion u/s 80IA - Assessee has entered into infrastructural development project promoted by State Govt - AO disallowed such deduction on the basis of explanation added in section 801A(4) through Finance Act, 2007 and 2009
HELD THAT:- We have gone through the facts of case, the case of the department is that the explanation added to section 80IA(4) by Finance Act, 2007 with retrospective effect from 1.4.2000 and thereafter amended by Finance Act, 2009 with retrospective effect from 1.4.2000 is applicable. Since the explanation to section 80IA(4) has been added and as per explanation if any work is allotted to an assessee on contract basis then no deduction under section 80IA(4) is allowable.
Once in a particular year an assessee has been declared as a Developer then on the same set of facts the assessee cannot be held as a Contractor in a subsequent year. Therefore, the contention of ld. A/R that once assessee has been held as a Developer then in next year or the year under consideration it cannot be held as a Contractor, is acceptable.
We have seen the Explanation added to section 80IA by Finance Act, 2007 and amended by Finance Act 2009 and found that there is no material difference in the language of Explanation added by Finance Act, 2007 and amended by Finance Act, 2009. There is only difference of words i.e. the Central or State Government were included by the Finance Act, 2009. Otherwise, the language is same. The language of the Explanation says that if the Enterprise is a contractor then deduction under section 80IA (4) will not be allowable.
After going through clauses of agreement, according to which assessee has to develop the design and has to be approved by the Engineer-in-Charge and thereafter the manufacturing of Gate has to be started. The awardee has to develop the design itself. If there was no development of design then there could not have been payment on account of development of design. Tender specifications specifically provide the cost of design which is 2%. There is also clause of payment on account of maintenance and running and from all these clauses it is established that assessee is not merely a contractor but a Developer also and as per Explanation added to section 80IA the Developer is not barred for deduction under section 80IA(4).
On ground that assessee has not invested its own funds as they were taken from the VIDC. We have discussed various clauses of detailed Tender Notice, the assessee has invested its own money in developing the design of Gates and manufacturing the Gates after approval of the Engineer-in-Charge of the VIDC. After getting satisfied, then only payment is to be approved and made. Therefore, this is not a case of financing the project by the Corporation or reimbursement of expenses by the Corporation. It is the investment of the assessee only and, therefore, the argument of ld. D/R does not have weight on this point.
The ld. CIT D/R has relied on the decision of Special Bench in the case of BT. PATIL & SONS BELGAUM CONSTRUCTION (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2, KOLHAPUR [2009 (10) TMI 521 - ITAT MUMBAI]. This decision of Special Bench has been over ruled now by the Hon’ble Bombay High Court in case of COMMISSIONER OF INCOME-TAX VERSUS ABG HEAVY INDUSTRIES LIMITED [2010 (2) TMI 108 - BOMBAY HIGH COURT].
In the present case the facts are on more stronger footing as assessee has to develop the design of gates of dam and thereafter they have to fix the gates in the dam and they have to operate and look after the maintenance also for two years. Therefore, in our humble view the assessee is entitled for deduction under section 80 IA(4) even after the decision of Special Bench in case of M/s. B.T. Patil & Sons and even after Explanation added in section 80IA(4) by Finance Act, 2007 and amended by Finance Act, 2009 with retrospective effect from 1.4.2000 - Decision in favour of Assessee.
Disallowance on account of Traveling, telephone and Prior Period Expenses - AO made disallowance as such expenses were not for business purposes - Also, being prior period expenses disallowance was made - HELD THAT:- Regarding traveling and telephone expenses - how the expenses are not for business purposes, AO has not brought any material on record. Assessee filed full details regarding such expenses, therefore, we delete the addition on account of telephone and traveling expenses - Decision in favour of Assessee.
Regarding disallowance of expenses being prior period expenses, assessee did not produce any evidence in support of his claim. Therefore, the expenditures were disallowed by AO and confirmed by ld. CIT (A) - Decision against Assessee.
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2011 (8) TMI 1167 - ITAT MUMBAI
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... ... ..... his income and/or that it represented his concealed income. Here again it is case where the surrender was not made by the Assessee under circumstances under which the surrender was made by the Assessee in the case before us. 15. We are of the view that imposition of penalty would depend on facts and circumstances of a given case. On the facts of the present case, we are of the view that the circumstances under which surrender was made by the Assessee , the fact that due his age he could not travel to Calcutta to verify details, the fact that he wanted to buy peace and avoid litigation etc., shows that the explanation offered by the Assessee is bonafide. In the circumstances, we are of the view that penalty should not be imposed on the Assessee. We therefore direct that the penalty imposed should be cancelled. We order accordingly. The appeal of the Assessee is allowed. 16. In the result, the appeal is allowed. Order pronounced in the open court on the 5th day of Aug., 2011.
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2011 (8) TMI 1166 - ITAT MUMBAI
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... ... ..... held that even under the amend provision of section 147 the concept of change of opinion has not been oblitrated and it is an inbuilt test to check abuse of power by the Assessing Officer. Their lordship have observed that the AO has power to reopen provided tangible material to come to the conclusion that there is escapement of income from assessment. In view of the above discussion and when that there is no new information or material came to the knowledge of the AO after passing the original assessment u/s.143(3), the reopening of the assessment is not sustainable and liable to be set aside. Accordingly we hold that the reopening of the assessment in this case is against law and consequent reassessment is null and void. In view of our finding that the reassessment is invalid, no propose to go to the merit of the addition made on the issue of technical know how fee. 11. In the result, the appeal of the assessee is allowed. Order pronounced on this 24th day of August, 2011.
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2011 (8) TMI 1165 - ITAT MUMBAI
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... ... ..... hat even in the remand report, the AO had reported that some of the vouchers were self made and the supporting bills were not equivalent to vouchers.” o p /o p 17. Having heard the rival contentions and having perused the material on record, we see no reason to interfere with the well reasoned order of the CIT(A). As has been rightly observed by the CIT(A)that the AO has not pointed out any specific discrepancy or defects in the vouchers produced by the assessee and has simply disallowed 20 of the expenditure on the ground that some of the vouchers are self made. This kind of adhoc disallowance is devoid of any legally sustainable foundation and based on generalized and vague observation which cannot meet 0judicial approval. The CIT(A) has rightly deleted the impugned disallowance. We approve and confirm his action. o p /o p 18. Ground No.3 is dismissed. o p /o p 19. In the result, appeal is dismissed. o p /o p Pronounced in the open court on 29th August, 2011 o p /o p
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2011 (8) TMI 1164 - CESTAT MUMBAI
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... ... ..... 1) ELT 163 (SC) whereby the Hon’ble Supreme Court held that the Commissioner (Appeals) has no power to condone the delay beyond the period prescribed under the Central Excise Act. 5. In view of this, the appeal is being taken up for hearing. As per the acknowledgment as reproduced in the order-in-appeal, the adjudication order was received by the appellant on 13.3.2008 and the appeal was filed on 13.6.2009. As per the provisions of Section 35 of the Central Excise Act, the appeal has to be filed within a period of 60 days from the date of receipt of the adjudication order and the Commissioner (Appeals) can condone the delay of 30 days on showing sufficient cause for not filing the appeal within the normal period. We find that the Commissioner (Appeals) has no power to condone the delay beyond the period prescribed under the Act. In view of this, we find no infirmity in the impugned order. The appeal is dismissed. The stay petition is also dismissed. (Dictated in Court)
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2011 (8) TMI 1163 - GUJARAT HIGH COURT
Penalty u/s 271(1)(c) - TDS default - Held that:- Tribunal was of the opinion that due to ignorance of the provision containing in Section 40(a)(ia) of the Act, the assessee did not deduct TDS from the payment made to labour, transport and carting expenses. Tribunal was also actuated by the fact that the C.A. who audited the accounts of the assessee under Section 44AB did not point out any infirmity on account of non-deduction of TDS otherwise, all the relevant accounts were adduced before the Assessing Officer. Thus, when the Tax audit report also did not point out the TDS default to the assessee, the Tribunal concluded that the mistake made by assessee was bonafide and the explanation was found genuine.
The Tribunal drew support from the order of CIT(A) that there was no concealment nor was this is a case of furnishing of inaccurate particulars. The reasonings given by both the adjudicating authorities concurrently cannot be held as perverse nor are there any grounds made out by the Revenue to dislodge the findings.
Resultantly, when there is no concealment nor any occasion of furnishing inaccurate particulars to bonafide mistake, Tribunal rightly uphold the order of CIT(A), deleting the penalty, therefore, this Tax Appeal merits no consideration as question of law is to be determined. Hence, same is dismissed.
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2011 (8) TMI 1162 - ITAT HYDERABAD
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... ... ..... d instead, they pay the monthly subscription after deducting the amount of dividend earned. Members who have bid for the chit in auction have the liability to keep the contribution to the chit till the end of the chit period and the prized members get dividend in future months also. Usually the discount, namely, the sum of money, which the prized subscriber is required to forgo, decreases over periods. The person getting money in the last period received the full scheme amount.” 5. In view of the above findings of the various courts, we are of the opinion that the CIT(A) is justified in holding that the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly the assessee is not liable to deduct TDS u/s. 194A of the Act and not liable for interest u/s. 201(1) and 201(1A) of the Act. 6. In the result, both the appeals of the Revenue are dismissed. Order pronounced in the Open court on 11th August, 2011.
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2011 (8) TMI 1161 - ITAT JAIPUR
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... ... ..... of transfer of capital asset is less than the value adopted for the purpose of payment of stamp duty, the value so adopted shall be deemed to be the full value of consideration for such transfer. But these facts alone are not sufficient to conclude that assessee concealed his income or furnished inaccurate particulars. 8. On similar facts, the Chennai Bench of the Tribunal in the case of Mrs. N. Meenakshi, 319 ITR 262, the penalty has been deleted. In this case also the addition was made in view of provisions of section 50C. The matter reached to the Tribunal and the Tribunal cancelled the levy of penalty by holding that no income was concealed as no inaccurate particulars were furnished. 9. In view of the above facts and circumstances, we hold that ld. CIT (A) was justified in canceling the levy of penalty. Accordingly, the order of ld. CIT (A) is confirmed. 10. In the result, appeal of the department is dismissed. 11. The order is pronounced in the open court on 19.8.2011.
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2011 (8) TMI 1160 - ITAT KOLKATA
Nature of income - income is to be treated as Short Term capital gain and not as business income as held by the AO
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2011 (8) TMI 1159 - ITAT KOLKATA
Nature of Compensation paid to Forest Department - payment as Net Present Value (NPV) as per the direction of Apex Court for smooth running of business / mines activities - Captial or Revenue Expenditure - Allowable u/s 37(1) or not? - Assessee claimed that this expenditure was obligatory in nature - CIT(A) considered it as revenue expenditure - HELD THAT:- It is relevant to state that facts and the issue involved in this appeal before us are identical to the facts and issue in ASSISTANT COMMISSIONER OF INCOME TAX VERSUS RUNGTA SONS (P) LTD [2014 (1) TMI 1515 - ITAT KOLKATA]. Following the decision in the said case, we hold that the said expenditure is paid by the assessee as NPV to the Divisional Forest Officer to enable the assesee to carry on its mining business is revenue in nature, which is allowable as business expenditure under section 37(1) of the Act. Therefore, we uphold the order of ld. CIT(Appeals)
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2011 (8) TMI 1158 - ITAT JAIPUR
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... ... ..... at source u/s 194J of the Act. There is difference between the fees and contribution. Sec 194J is applicable when a person pays the fees for professional or technical services. If there is a statutory contribution, then it is not a fee. M/s. Krishi Upaj Mandi Samiti has no written, oral or implied contract with RSAMB for technical services. Hence, Section 194J is not applicable. 2.4 Before us, the ld. AR submitted in the written submission that RSAMB is deducting the tax at source in respect of payment given to the contractors and Section 194C is complied with RSAMB. 2.5 After hearing both the parties and looking to the above discussions, we hold that assessees before us were not required to deduct the tax at source in respect of the amounts payments paid to RSAMB either as contribution or for execution of the development work. Hence, the appeals are allowed. 3. In the result, the appeals of the assessees are allowed. The order is pronounced in the open Court on 05-08-2011.
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2011 (8) TMI 1157 - ITAT JAIPUR
Addition u/s 40A - Held that:- Payments were made in villages and amount of payment was genuine. Since both these issues have already been decided by the Tribunal in above stated cases, therefore, on account of payment made to villagers in the villages, provisions of section 40A(3) are not applicable as held by the Tribunal above. Since we have allowed the issue toto in favour of the assessee by holding that no expenditure can be disallowed under section 40A(3) as assessee has not claimed any expenditure in its Profit & Loss account, therefore, we hold that even part disallowance cannot be made on account of payment made to the parties residing in Jaipur. Accordingly we delete the entire disallowance sustained by ld. CIT (A).
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2011 (8) TMI 1156 - ITAT MUMBAI
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... ... ..... nsequently the expenditure on export commission payable to non-resident for services rendered outside India was allowable expenditure and was outside the ambit of section 40(a)(ia) of the Act. The Commissioner (Appeals) observed that the Assessing Officer had not been able to establish that there was any specific intention of the payment to receive the payment within the territory of India. The Commissioner (Appeals) was justified in directing the Assessing Officer to delete the addition.” 8. Since the amount of commission paid was not taxable in India as no services were rendered in India, mere remittance to non-resident does not attract provisions of section 195(1) as held by the Hon'ble Supreme Court in the case of GE India Technology Centre P. Ltd. vs. CIT 327 ITR 456. In view of this, we do not see any reason to interfere with the orders of the CIT(A). 9. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 24th August 2011.
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2011 (8) TMI 1155 - ITAT HYDERABAD
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... ... ..... s as under- “1. The CIT(A) erred on facts and in law in directing to allow deduction u/s.54F, after verifying the investment in purchase of land.” 7. We have heard the parties. In view of the fact that we have, while dealing with the assessees’ appeals hereinabove, set aside these matters to the file of the CIT(A) for passing the appellate orders de novo, duly adjudicating upon the additional grounds No.3, 4 and 5 raised by the assessees in their appeals, after considering admissibility thereof, we are of the view that it shall be justified to restore the issue involved in this Revenue appeal also to the file of the CIT(A) to redecide the same de novo in accordance with law after providing reasonable opportunity of hearing to both the parties. We direct accordingly. 8. In the result, Revenue’s appeal is allowed for statistical purposes. 9. To sum up, all the eleven appeals are allowed for statistical purposes. Order pronounced in the court on 5.8.2011
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2011 (8) TMI 1154 - ITAT MUMBAI
Rural Development Expenditure - AO disallowed rural development expenditure on the ground that in the earlier years, an identical claim was disallowed - HELD THAT:- We note that a similar issue came before the Tribunal for AY 1994-95, where The AO allowed the claim of the assessee. Accordingly, the claim of the assessee for the AY under consideration is also to be allowed, if the claim is identical on the facts as it was in the earlier years. Accordingly, we restored this issue to the record of the AO for limited purposes to verify, if the facts in respect of the claim of rural development expenses are identical as to the earlier years, then the same shall be allowed - Matter restored back.
Interest u/s 244A - Interest along with income tax refund - The assessee has received interest u/s 244A. Such interest may undergo changes as dept. and assessee has appealed against such interest amount and the decision for the same is pending HELD THAT:- It is found that this matter is settled by the decision of the Special Bench of the Tribunal in the case of AVADA TRADING CO. (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, SPL. CIRCLE 18 (1) [2006 (1) TMI 465 - ITAT MUMBAI], where it was viewed that the assessee would not be remediless, if any change or reduction in the amount of interest refund u/s 244A in future; in that eventuality, the assessment can be rectified u/s 154 and therefore, the apprehension and the contention of the assessee was found baseless by the Special Bench.
Therefore, respectfully following the decision of the Special Bench of the Tribunal, we do not find any merit or substance in the ground taken by the assessee; accordingly, the same is rejected. However, as observed by the Special Bench, if any change or reduction in the interest, refund to the assessee u/s 244A, the same has to be taken into account u/s 154 - Decision in favour of Assessee.
Depreciation of Rollover Charges - Revenue or Capital in Nature? - Assessee’s claim for roll over charges was disallowed by the department being capital in nature - HELD THAT:- In view of the decision of the jurisdictional High Court in assessee's own case EDELWEISS CAPITAL LTD., MUMBAI VERSUS INCOME TAX OFFICER 3 (1) (1) , MUMBAI 2012 (10) TMI 223 - ITAT, MUMBAI and in view of the facts that in the earlier years, the AO himself has allowed the depreciation on the expenditure, which was treated as capital in nature, the claim of depreciation on such expenditure treated as capital in nature is therefore, allowable. Accordingly, we decide this issue in favour of the assessee.
Disallowance u/s 10A (9) - Assessee claimed expenditure incurred being payment made to the School wherein the children of the employees of the assessee are studying. The AO disallowed the expenditure - HELD THAT:- We find that the same issue had been considered by the tribunal in assessee’s own case in assessment year 1994-95. In that year also disallowance had been made u/s 40A(9). The tribunal, however following the decision in A.Y.1992-93 and 1993-94 allowed the claim. Facts this year are identical. Therefore, we allow the claim of the assessee.
Admission of additional grounds
Sales Tax exemption benefit to be Excluded from taxable Profit - Assessee raised the additional grounds and for this additional evidences were also submitted in the shape of copy of sales tax exemption scheme
HELD THAT:- In our considered opinion and in the interest of justice, additional grounds are required to be reconsidered at the levy of the AO. We have one more reason to restore the issue to the AO because an identical issue has already been considered and restored back to the file of the AO in the case of the assessee, M/S. ADITYA BIRLA NUVO LTD. FORMERLY INDIAN RAYON AND INDUSTRIES LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX -3 (2) [2011 (2) TMI 962 - ITAT, MUMBAI], where it was held that, principle relating to admission of additional ground being a legal ground for the first time before the tribunal is settled by the judgment of Hon’ble Supreme Court in case of NATIONAL THERMAL POWER COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1996 (12) TMI 7 - SUPREME COURT], in which the Hon’ble Supreme Court held that question of law arising from the facts which are on record in the assessment proceedings has to be allowed to be raised if it is necessary to consider the question in order to correctly assess the tax liability of the assessee. Accordingly, the matter is restored to the record of the Assessing Officer to examine the additional evidences filed by the assessee then decide the issue as per law.
Expenditure incurred on assets not owned - Revenue or Capital Expenditure? - HELD THAT:- Since this is a consequential relief sought by the assessee in case the expenditure incurred on the assets not owned by the assessee claimed as revenue expenditure but such expenditure has already been held by the Tribunal in AY 1995- 96 as capital in nature. -Decision in favour of Assessee.
Interest Expenses for period prior to commencement of business - Deduction u/s 36(1)(iii) - Assessee claimed amount being interest paid on capital borrowed funds for its new project. Assessee capitalized and showed the interest under capital work-in progress in the books of account; however, has claimed as deductible revenue expenditure in computing the profits and gains of business u/s 36(1)(iii) -
HELD THAT:- We find that the facts of this issue are para-material to Assessment Year 1995- 96. Since the Tribunal has adjudicated the issue after considering all the decisions including the decision of the jurisdictional High Court in the case of Tata Chemicals Ltd reported in 256 ITR 395, where it was held that, The only requirement of the sec. 36(1) is that the capital should be borrowed for the purpose of business and the interest expenditure should be incurred. Therefore the point to be considered is whether the new unit was an independent business or part of the existing business. In case the new unit found to be part of the existing business the interest on capital borrowed has to be allowed as deduction. Once these conditions are satisfied the interest has to be allowed as a revenue expenditure irrespective of the fact whether borrowed funds are used for acquisition of capital asset or for setting up of new units
Respectfully following the above decisions, we hold that the new unit being set up by the assessee was integral part of the same business and therefore interest on money borrowed has to be allowed as deduction. We therefore decide this issue in favour of the assessee.
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