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2016 (6) TMI 597 - HC - Income TaxCommencement of business - whether in case of an assessee, whose main object is to construct dam, canal, etc., the business commences only when the entire project for construction of dam, canal, etc. is complete, and not when the first brick was put up at the construction site? - Held that:- What is to be regarded is as to whether the business of the assessee has been set up or not so that the assessee could avail benefits under the Act. Broadly speaking, the activity of the assessee could be divided into three categories ( i) Construction of Dam and related works (ii) HydroPower Plant and (iii) Narmada Main Canal. Considering the different categories of work, it can not be said that such objects could be achieved without contemplating different stages of completion.It would be wrong to uphold the contention of Revenue that only on completion of work of entire Canal, the assessee’s business can be said to have been set up. In a Project like the “Sardar Sarovar”, there are bound to be different stages where different activities take place and those activities being integral part of business and when they are set up phase wise, the assessee cannot be deprived of the benefits of fiscal legislation in disregard of the well settled principles on the issue. - Decided in favour of assessee Allowability of interest expenditure u/s.57 against the interest income - Held that:- The expenditure of interest paid on borrowings raised by the assessee for the purpose of construction of Dam would be allowable deduction since the purpose of expenditure is manifest and there is a clear nexus between the expenditure and the earning of income. Therefore, essentially, the expenditure is a part of the business expenses of the assessee - Decided in favour of assessee
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