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2013 (9) TMI 337 - AT - Income TaxDisallowance of Interest - Loan to sister partnership firm - nature of loan, business purpose or personal purpose - Whether the interest-free amount advanced to AG Info Solutions (partnership firm) was for commercial expediency or not – Held that:- it has to be examined whether the funds advanced by the taxpayer company was used for the personal purpose or for business of the firm where the taxpayer company has its full interest. Since this aspect was not examined, this Tribunal is of the considered opinion that the matter needs to be re-examined. - In S. A. Builders Ltd. v. CIT [2006 (12) TMI 82 - SUPREME COURT] it was held that, whenever there was a nexus between the expenditure and the purpose of business which need not necessarily be for the business of the taxpayer itself, the payment of interest cannot be disallowed - the orders of the lower authorities are set aside and the issue is remitted back to the file of the Assessing Officer - decided partly in favor of assessee. Disallowance of Depreciation - business premises known as "DD Milestone". - The depreciation with regard to "DD Milestone" building has already been remitted back to the file of the Assessing Officer - In respect of the other two flats in Link Horizon, Marine Drive, Ernakulam and in Uni-Housing at Ernakulam the claim of the taxpayer is that the flats were given to the directors for the purpose of the taxpayer's business. Therefore, it has to be examined whether the flats were in fact given to the directors for the business purpose of the taxpayer or not. For the sake of consistency, this Tribunal is of the considered opinion that this issue also needs to be re-examined by the Assessing Officer. Accordingly, the orders of the lower authorities on this issue are set aside and the issue is remitted back to the file of the Assessing Officer for re-consideration. The Assessing Officer shall re-examine the issue afresh and find out whether the flats in question were used by the directors for the business needs of the taxpayer and thereafter will decide the issue in accordance with law after giving opportunity of hearing to the taxpayer. Exemption u/s 10A - whether, blending and packing of tea amounts to manufacture so as to qualify the taxpayer for claiming exemption under section 10A of the Act - Held that:- Commissioner of Income-tax (Appeals) had rightly allowed the claim of the taxpayer - The judgment of the jurisdictional High Court is binding on this Tribunal – Tata Tea Ltd. Versus ACIT [2010 (1) TMI 743 - Kerala High Court ] - industrial units engaged in the very same activity ; i.e., blending, packing and export of tea in the special economic zones and free trade zones, will continue to enjoy tax exemption under section 10A and section 10AA respectively. The still worse position is that the appellant would be denied of export exemption available under section 80HHC even to a merchant exporter - Provisions of section 10A and the EXIM policy and found that "manufacture" as defined under the EXIM policy has a wider and literal meaning covering tea blending as well - blending and packing of tea qualifies for exemption under section 10A of the Act. - Decided against the assessee.
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