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2014 (4) TMI 313 - AT - Income TaxDisallowance of interest on investment – Investment made in borrowed funds – Held that:- The assessee has not received any interest from Tellicherry Medical Foundation & Infrastructure Ltd. -The assessee is entitled only for the dividend on the investment made in preferential shares - the question arises for consideration is whether the dividend income received by the assessee is liable to be included in the total income of the assessee or not? If the dividend income received / receivable by the assessee would form part of the total income of the assessee, then the interest on the borrowed funds for making the investment would be an allowable expenditure - In case, if the dividend income received by the assessee from Tellicherry Medical Foundation & Infrastructure Ltd would not form part of the total income of the assessee then the interest on the borrowed funds for making such investment cannot be allowed as expenditure - the factual aspect needs to be verified – thus, the order of the AO is set aside and the matter is remitted back to the AO for fresh adjudication as per the law laid down in Commissioner of Income Tax Versus Popular Vehicles and Services Ltd. [2010 (1) TMI 730 - Kerala High Court] – decided in favour of Revenue.
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