Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2016 (8) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (8) TMI 210 - HC - Income TaxAllowbility of expenditure - whether the old business had come to an end and the new business had not started? ? - Held that:- As looking to the facts on record and in view the fact that amendment in the Memorandum of Article was made, we are of the opinion that the company has utilized its property, which was available in the books of account, as also the company has tried to come out from the gross expenditure and another activity is carried out. However, the nature of business may be different but that would not make the appellant disentitle and therefore the Tribunal has committed an error in holding that old business come to an end and new business has not started Allowability of carry forward of loss - Held that:- Not allowing to carry forward of loss suffered after November 7, 1990 as the business of real estate had been commenced thereafter, in this regard it is required to be noted that activity of the construction has been started after taking title from the Bank and payment was made after approval and new activity was started from the date when they have cleared all the dues and this fact is clearly established from the letter issued by the Bank dated April 16, 1987. Thus, the tribunal has committed an error and we accordingly answer this question in favour of assessee and against the revenue. Disallowance of interest paid to the Directors - Held that:- We are of the opinion that the loan amount was taken by the company from the Director and that was for the beginning of new activity and if such payment could not have been made, the Bank will not issue title for new activity and the company might have suffered a great loss. Thus, taking into account the fact that since the new activity is for the benefit of the company and loan amount is taken from the Director, the interest of which is required to be paid to the Director, the question is accordingly answered in favour of assessee by allowing payment of interest as expenses under the Act.
|