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2013 (9) TMI 637 - AT - Income TaxDisallowance u/s 36(1)(iii) of interest expenditure of ₹ 95,69,72,766 allegedly incurred by the assessee for earning income exempt under section 10(23G) of the Act – use of own funds or borrowed funds - Held that:- the assessee had made investments from its own funds and the borrowed funds - The assessee has made investment in certain order of preference, viz., infrastructure loans which are eligible for deduction under section 10(23G), thereafter in infrastructure equity for claiming benefit under section 80M and remaining amount of own funds in infrastructure loan for claiming exemption under section 36(1)(viii) – Issue remitted to the Assessing Officer for limited purpose to determine whether at the time of making investments as claimed by the assessee its own funds were available to the extent of investment made. In case, the assessee had own funds at the time of making investments, the benefit be granted to the assessee – Appeal allowed – Decided in favor of Assessee. Carry forward of loss under the head ‘Capital Gains’ arising from sale of shares by treating the investment as eligible for exemption under section 10(23G) of the Act – Held that:- The assessee cannot be allowed to take benefit both ways i.e. exemption u/s 10(23G) and setting off of loss - Since the income is not taxable, the loss incurred from the sale of shares cannot be allowed to be carried forward – Decided against the Assessee. Indexation of long term capital loss on listed securities – Held that:- The provisions of section 48 of the Act provides that the benefit of indexation is not available in case of certain specified long-term capital assets. Apart from the specified assets the benefit of indexation is available to all long-term capital assets. The provisions of section 112 provides for the tax on long term capital gains at the flat rate of 20 percent In case listed securities/ shares/units are transferred without the benefit of indexation, then the long-term capital gain is taxable at the rate of 10 percent – Decided in favor of Assessee. Eligibility of underwriting commission for exemption u/s 10(23G) of the Income Tax Act – Held that:- As per the provisions of section 10(23G) any income by way of dividend, interest on long-term capital gains is eligible for deduction. As per Explanation 1(f) to the proviso of section 10(23G) "interest" includes any fee or commission received by a financial institution for giving any guarantee or enhancing credit in respect of enterprises which has been approved by the Central Government for the purpose of this clause. Underwriting commission does not fall within the definition of "interest" as provided in Explanation 1 to the proviso of section 10(23G) – Decided against the Assessee.
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