Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2017 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 63 - HC - Income TaxInterest on Special Purpose Notes - Held that:- The assessee's claim of deduction arises out of section 36(1)(iii) of the Act under which while computing the income under section 28 of the Act, the deduction of the amount of interest paid in respect of capital borrowed for the purposes of the business or profession would be a deductible expenditure. The first objection of the Revenue is squarely covered by the judgment in case of Core health Care ltd.(2008 (2) TMI 8 - SUPREME COURT OF INDIA ). While confirming the decision of this Court, it was held that for the said deduction, all that was necessary was that the money i.e. capital must have been borrowed by the assessee, that it must have been borrowed for the purpose of business and lastly, that the assessee must have paid interest on the borrowed amount. All that is germane is whether the borrowing was, or was not, for the purpose of the business. It was held that the provision makes no distinction between money borrowed to acquire a capital asset or a revenue asset. Preoperative expenditure of interest - Held that:- As in the context of project interest expenses of the same two projects, this Court had confirmed the view of the Tribunal that the assessee through its existing administrative mechanism had started a new facility for production of soda ash and lab for its captive consumption for the purpose of its existing business of manufacturing soaps. The Court therefore, held that the expenditure was not in the nature of preoperative expenditure of interest. Accrual of interest liability - Held that:- In the present case, however, the vital fact is that the company, investors, banks and financial institutions and all and sundry were aware that the SPNs would be foreclosed and that the company would pay out a sum of ₹ 361/per SPN. The fact that NCDs and SPNs were both freely transferable is not in dispute. If the promoters SPN holders and the banks and financial institutions therefore, traded in such SPNs, the same would not indicate any colourable device of tax planning. Mere early redemption also would not be enough to hold that from the inception there was a device created by the company to defeat the Revenue's interests.
|