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2016 (5) TMI 723 - HC - Income TaxPre commencement interest on capital borrowed for a new glass manufacturing unit - Revenue or capital expenditure - ITAT allowed as revenue - Held that:- CIT (A) and the Tribunal have rendered a finding of fact that the Respondent–Assessee was carrying on business of glass manufacturing plant at Jambusar in Gujarat and setting up the new business was a mere expansion of its existing business. Further, both the Authorities also found that as a matter of fact there was a functional integrity between all the three business viz. Pharma business, bulk drugs business and glass manufacturing business with interlinking of management and funds. This finding of fact rendered by the Tribunal has not been shown to be perverse or arbitrary. Moreover the finding of fact rendered by the CIT(A) and the Tribunal about glass manufacturing being existing business and commonality of management and funds not being shown to be perverse, the question as formulated does not give rise to any substantial question of law. Thus, not entertained. Expenses pertaining to closed down Thane unit incurred after closure of unit - ITAT allowed the claim u/s 37 - Held that:- CIT (A) and the Tribunal have rendered a concurrent finding of fact that the closure of the manufacturing unit at Thane was on account of statutory compulsion. Further, the business of manufacturing at Thane had not ceased but had been shifted to other locations/units of the RespondentAssessee. Moreover the CIT (A)as well as the Tribunal had by applying the decision of the Apex Court in K. Ravindranathan Nair (2000 (11) TMI 3 - SUPREME Court ) concluded that the business of manufacturing drugs at different units constituted a single business and closing down of one unit and shifting its activity to other units, would be expenditure incurred was for the purposes of business. The closure of Thane unit was out of business necessity arising out of statutory compulsion. Thus the expenditure was incurred with regard to carrying on its business and thus allowable under Section 37(1) of the Act. Investment in tax free bonds out of the own funds - non utilization of borrowed funds - Held that:- We find that the CIT(A) as well as the Tribunal have come to concurrent findings of fact that the investment made in the shares, mutual funds and tax free bonds were not made out of borrowed funds but out of the RespondentAssessee's own funds. The Revenue has not been able to show that the aforesaid finding of fact is in any manner perverse.In the above view, the question as formulated does not give rise to any substantial question of law
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