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2013 (9) TMI 688 - AT - Income TaxInterest income to be adjusted towards the cost of the project - Assessee has utilised the borrowed funds for earning the income to that extent, the interest has to be given set off to the interest paid on the borrowed funds - It was the contentions of the assessee that there is a direct nexus and these funds are not surplus funds so as to consider as income from other sources Held that:- Direct nexus aspect requires examination by the AO and in case there is direct nexus with the earning of interest income with that of the borrowals, then only net interest can be brought to tax or adjusted in the construction account Restored the issue to the file of the AO to examine the nexus aspect of the earning of interest income on borrowed funds, specifically borrowed for the purpose of project which is under construction and decide accordingly. Disallowance of leave encashment Amount involved is ₹ 1,03,25,488/- - Assessee made a provision of leave encashment on actuarial basis which was disallowed by the AO as a provision Held that:- Restored the matter to the file of the AO for fresh adjudication as and when the decision of the Hon'ble Supreme Court is rendered on this issue in the case of Exide Industries Ltd., which has been decided by Kolkata High court referred in [2007 (6) TMI 175 - CALCUTTA High Court ] and which is still pending before the Honble Apex court. Disallowance of Bad Debts A.O. disallowed the amount on the reason that no details were furnished Held that:- The claim of amount satisfy the conditions of section 36(2) as these are taken into the books of account - These advances/ receivables are part of the business activity of the assessee and there is no dispute with reference to the amounts being receivable - Except the amount of TDS, which is claimed as bad debt, other amounts, in our view, are allowable as bad debt and in the alternative also as business loss - For the purpose of verification including the claim written off as TDS, the issues are restored to the file of the AO to examine the facts first and then decide according to law Matter restored to the file of A.O. Decided in favor of Assessee for statistical purpose.
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