Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2017 (8) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (8) TMI 647 - HC - Income TaxBenefit of deduction u/s.57(iii) - whether payment was made for enlarging the control and management over - capital expenditure or revenue expenditure - Held that:- In the present case, the Respondent/Assessee has been denied the deduction under Section 57(iii) by the CIT (A) only because of absence of income by way of dividend/interest in the subject Assessment Year. This connection/nexus between allowing of deduction u/s.57(iii) of the Act only upon earning of income in the subject Assessment Year has been negatived by the Apex Court in Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME Court ). In fact, the only requirement is that the expenditure is with the object of earning income and not dependent upon actual earning of income in fact. In this case, the impugned Order of the Tribunal has recorded a finding that the amount of ₹ 3.25 Crores were paid to Mr.G.R.Handa by the Respondent/Assessee only with a view to safeguard its investment in M/s.A.P.Rayons Ltd. so as to earn dividend/interest income. The decision of Gujarat High Court in Sarabhai Sons (P) Ltd. (1993 (1) TMI 53 - GUJARAT High Court ) relied upon by the Revenue would have no application to the present facts. Thus, on the present facts, no interference with the impugned Order is called for as it merely follows the Apex Court decision in Rajendra Prasad Moody (supra). The question as framed on behalf of the Revenue seeks to deny the respondent/assessee the benefit of Section 57(iii) of the Act on the ground that it is in the nature of capital expenditure as it was expended for enlarging control and management of M/s.A.P. Rayons Ltd. This finding of capital expenditure by the Assessing Officer was negatived by the CIT (A), who held it was allowable as a deduction under Section 57(iii) of the Act, only subject to earning of income. Section 57 (iii) of the Act itself excludes expenditure of capital nature. However, the Revenue accepted the above finding of the CIT (A), as no appeal on this aspect was filed to the Tribunal. Therefore, the question, as formulated, does not arise from the impugned Order of the Tribunal.
|