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2014 (3) TMI 470 - HC - Income TaxAllowability of Expenditure u/s 37 of the Act - Nature of Expenses – Payment made for right to use - Capital OR Revenue - Whether the Tribunal was correct in holding that the payment made for the right to use central court yard along with the marble installed to carry on its hotel business is a revenue expenditure allowable u/s 37 of the Act – Held that:- The decision in EMPIRE JUTE CO. LTD. -vs- COMMISSIONER OF INCOME TAX [1980 (5) TMI 1 - SUPREME Court] followed - There is no all-embracing formula which can provide a ready solution to the problem - no touchstone has been devised - Every case has to be decided on its own facts, keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred - But a few tests formulated by the Courts may be referred to as they might help to arrive at a correct decision of the controversy between the parties. If the advantage consists merely in facilitating the assessee’s trading operations or enabling the management and conduct of the assessee’s business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future - the amount paid to the Trust was for the use of the court yard under the MOU for an indefinite future – thus, it would be on revenue account - merely because the advantage may endure for an indefinite future would not mean that the expenditure would be on capital account and not revenue - The advance consists merely in facilitating the assessee’s business operations, enabling the management to conduct their Hotel business more efficiently and profitably – Decided against Revenue. Computation of deduction u/s 80IA of the Act – Interest on deposits – Held that:- The decision in LIBERTY INDIA Vs COMMISSIONER OF INCOME-TAX [2009 (8) TMI 63 - SUPREME COURT] followed – interest cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking - Decided in favour of Revenue. Allowability of deduction u/s 80HHD of the Act – Held that:- The decision in Commissioner of Income Tax & anr. Vs M/s.ITC Hotels Ltd. [2009 (9) TMI 675 - Karnataka High Court] followed – u/s 80HHD of the Act the reference is to the business of the assessee which is the business as a whole and as one unit and not by sub- dividing the total income of the business into unit-wise total income and then arriving at the unit-wise overall profit proportionate profit and then adding up the same for arriving at the benefit under section 80HHD of the Act – the decision followed has been admitted in the SC as SLP – thus, the assessee is entitled for the deduction by the time final judgement does not came – Decided against Revenue.
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