Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (9) TMI 133 - HC - Income TaxDeduction u/s 37 - Guarantee commission paid to State Government – Payment not provided u/s 7 SFC Act – Held that:- The record is not clear as to, for how many years the assessee has borrowed amounts, to create additional capital or whether the State Government had offered guarantee u/s 7 of the SFC Act, and if so, the conditions therefor - It was only from the year 1995 onwards, that the deductions were made in the form of the Guarantee Commission, paid to the State Government for its offering guarantee for repayment of amounts referable to Section 7 of the SFC Act - the fund created under the G.O. stands on a higher footing, and sub-serves a greater purpose, since the entire guarantee commission and not part of it, as contemplated u/s 35A is diverted to this - The objective is to make it available for payment of dividends, if in a given financial year, the Corporation did not post any profits. The Tribunal was guided more, by the manner in which the Guarantee Commission came to be paid - it gained an impression that the then Managing Director of the appellant had volunteered to pay the commission with a view to avoid payment of income tax - This can be blushed aside, if one takes into account, the fact that the amount was brought into the fund through a G.O., to be kept at the exclusive disposal of Corporation for payment of dividends, whenever profits are not posted, a different impression becomes possible – thus, the order disallowing the Guarantee Commission paid to the State Government as allowable deduction is set aside and the amount is deductible u/s 37 – Decided in favour of assessee.
|