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2019 (11) TMI 1302 - HC - Income TaxDeduction u/s 37 or u/s 35D - expenditure relatable to public issue of non-convertible debentures - scope of circular issued by CBDT - deduction u/s 37(1) where specific provisions of section 35D exists - HELD THAT:- We have heard counsel for the revenue, whose contention is that the judgments of the Hon’ble Supreme Court in India Cements Ltd. Vs. Commissioner of Income Tax, [1965 (12) TMI 22 - SUPREME COURT ] and of Commissioner of Income Tax Vs. Modi Industries, [ 1992 (10) TMI 74 - DELHI HIGH COURT] pertain to the assessment years 1950-51 and 1965-66, respectively whereas section 35D was inserted in the Income Tax Act, 1961 with effect from 01.04.1971 and was applicable from assessment year 1971-72 onwards and therefore had rightly been applied by the AO in the present case which pertained to assessment year 1995-96. Revenue further argued that the expenses which come under the ambit of specific provisions of section 35D cannot be allowed under the residuary provisions of section 37 of the Act. But the counsel for the revenue was unable to point out any perversity in the Central Board of Direct Taxes’s Circular No.56 dated 19.03.1971, ( date inadvertently mentioned as 19.03.1997 by the CIT(A) and ITAT ) which was relied upon by the CIT(A) and the ITAT, and contains Explanatory Notes on various sections of Income Tax Act, 1961, including section 35D of the Act. Para 45 of the Circular says provisions for amortization is not intended to supersede any other provision in the income-tax law under which the expenditure is allowable as a deduction against profits. Where any expenditure has been included for the purpose of amortization u/s 35D on a claim being made by the assessee in that behalf, such expenditure will not qualify for deduction under any other provision of the Act for the same or any other assessment year vide sub-s. (6) of s. 35D. Revenue could not point out any illegality or perversity in the above mentioned C.B.D.T’s Circular and the reliance thereon by the appellate authorities below, which may warrant interference by this Court. No question of law much less a substantial question of law arises in these appeals.
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