Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (8) TMI 643 - AT - Income TaxAddition made on account of claiming of interest expense u/s 57(iii) - CIT(A) deleted the addition - whether there was no direct nexus between the loan borrowed by the assessee and the interest bearing loan advanced by the assessee? - Held that:- . We find that the assessee has advanced money out of the funds borrowed from the bank and therefore there is direct nexus between money raised and money lent. We are in agreement with findings of the ld.CIT(A) that the interest to bank is admissible deduction against the interest earned by the assessee from lending such money. The fact has been admitted by the AO while recording the finding of facts that those interests have been earned on the money borrowed from the banks but the same was not allowed as deduction as the purpose of borrowing was different. Since there is direct nexus between the lending out of borrowed funds and thus the interest paid on borrowings from banks is allowable deduction u/s 57(iii) of the Act against the interest income liable to be assessed u/s 56 of the Act. In our opinion the CIT(A) has passed a very reasoned order which requires no interference on our part. - Decided in favour of assessee. Nature of expenses - revenue or capital - Held that:- On perusal of the records including the orders of authorities below, we find that the expenses incurred by the assessee under various heads as has been mentioned herein above are more of revenue in nature than the capital ones. The AO without going into the real nature of the expenses, described the same as capital in nature whereas as a matter of fact, the ld. CIT(A) has gone into the nature of expenses purpose of expenses and business expediency and accordingly treated the same as revenue expenditure. We, therefore finding no fault with the findings of ld.CIT(A) on this issue, dismiss the ground taken by the revenue by upholding the order of CIT(A) on this issue and direct the AO accordingly. Repairs and maintenance of plant and machinery for purchase of software - allowable revenue expenditure. Addition made by the AO towards Stamp Duty and Registration Fee - Held that:- We find that the ld. CIT(A) after going into the matter and facts of the case came to the conclusion that these expenses were of revenue nature which were incurred for the purpose of lease transactions and not for the purchase of capital assets . The ld. CIT(A), decided the issue in favor of the assessee by following the decision rendered in the case of Richardson Hindustan Ltd (1987 (3) TMI 44 - BOMBAY High Court ) and CIT vs. Cinecia P. Ltd.(1982 (2) TMI 58 - BOMBAY High Court ) and rightly followed the ratio laid down in the said decisions. The ld. CIT(A) further observed that the AO has not disputed the fact that the lease is Long term lease/licence and is not of recurring in nature. In view of these facts and the ratio laid down in the above said decision, we find no infirmity in the order of ld. CIT(A) and accordingly upheld the same by dismissing the appeal of the revenue. Addition u/s 14A - Held that:- From the record before us, we find that the assessee has made huge investments as stated above on which it has not received any exempt income by way of dividend during the year. Similarly from the record, we observe that the investments were made in the subsidiary companies with a motive to gain control over these subsidiaries companies and not for the purposes of earning tax free income or dividend. Having regard to the above facts and circumstances of the case, we find merit in the arguments of the ld.AR that the provisions of section 14A r.w.r 8D are not applicable to the present case of the assessee, where no exempt income is earned during the year and also where the investment are strategic in nature and not made with the motive of earning the tax free dividend.
|