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2016 (6) TMI 647 - HC - Income TaxDisallowance of business loss under Section 28 - adavnce on business expediency - Held that:- Simply meeting or reimbursing the expenditure of the controlled company, without anything more, does not afford any nexus between the business of the assessee and the loss. The fact that Castle Breweries was being controlled and managed by the assessee does not take its case any further. We have also perused the authorities cited on behalf of the assessee. Those cases were rendered on their own facts. Whether there was connection between the assessee’s business and the loss is a question of fact to be considered in the background of each case. There can be no dispute with the proposition that if the loss is incidental to the business, it should be allowed. However, it should be established by necessary facts that the loss is incidental to the business. We have before us a case where the assessee made advances to a controlled company and also incurred expenditure and debited these amounts to the account of the controlled company. This, in our opinion, may be prudent business practice or it might have arisen because of the assessee’s anxiety to save its controlled company from facing financial crunch. But, this by itself affords no nexus between the assessee’s business and the loss. In our view, the loss cannot be allowed as business loss u/s.28 of the Act. - Decided against assessee Addition u/s 14A - expenses incurred by the appellant towards interest and others on the loan borrowed for advances made to the subsidiaries in the course of business for its expansion - Held that:- Tribunal after holding in principle the applicability of Sec. 14A, has further directed the Assessing Officer to ascertain from the facts of the case as to how much interest bearing borrowings was utilized to acquire shares in the companies and the matter is relegated to the Assessing Officer. As per the language in Sec.14A, the enquiry has to be undertaken by the Assessing Officer which has been so ordered by the Tribunal. Hence, it can be said that the Tribunal has exercised the discretion where rights of both sides are kept open for admissible deduction under Sec.14A. When such a discretion is exercised and the rights of the appellant –assessee is also kept open to satisfy the Assessing Officer, it cannot be said that any substantial questions of law would arise for consideration, as sought to be canvassed. In our view, at the stage of enquiry under Sec.14A, it is open to the Assessing Officer to independently consider the matter for admissibility of the interest on borrowings and if yes to what extent. Hence, when the question at large is further to be considered by the Assessing Officer, we do not find that any further observations are required to be made in this regard. - Decided against assessee
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