Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (11) TMI 1316 - AT - Income TaxDisallowance of Interest expenditure - Assessee has borrowed huge funds from banks and also in the form of inter Corporate deposits etc - Assessee has been making early payments to the clients when the securities are sold and receiving delayed payments on the purchase transaction from the clientele and in the process has been incurring huge interest liability which apparently has not been passed to the clientele - Assessee has not been advancing any money to facilitate the transactions of clientele instead the assessee has been giving away the sale consideration immediately without waiting for the receipt of sale proceeds and assessee has been paying the monies which come from the clients on pay out day and pay in days – Held that:- Relying upon the Hon’ble Supreme court decision in the case of Bengal Enamel Works Ltd. [1969 (12) TMI 4 - SUPREME Court], it has been held that Assessee is the best judge of the expenditure. The expenditure incurred by assessee may found to be unnecessary and unavoidable. Still the same has to be accepted by department if it is for the purpose of business. There need not be any legal obligation to incur expenditure, but the principles of commercial expediency will ultimately prevail and the” act of the assessee has to be viewed from businessman angle not from the department. The interest paid by the assessee on borrowings was paid to various banks etc. on prevailing market rate and brokerage has been charged by the assessee on prevailing market rate. Therefore, it cannot be said that the interest expenditure incurred by the assessee was on account of any illegal activity. Allowability of excess brokerage shown in the service tax return as compared to brokerage income shown in profit and loss account – Held that:- Assessee has been reflecting the service tax return, the brokerage on accrued basis but in profit and loss account the brokerage has been shown on actual basis on the basis of constant method adopted by the assessee - Sometime the assessee is required to reduce the brokerage at the request of the assessee during the final settlement of the bills and some time the assessee is also required to waive part of the brokerage disputed by the clients - Therefore, difference as per the service tax return and as per profit and loss account was found explainable – Decided against the Revenue.
|