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2022 (7) TMI 1088 - AT - Income TaxTaxability of Interest received u/s.244A - Whether CIT (A) erred in confirming that the interest received u/s 244A is taxable when the right to receive is under dispute in view of the appeals filed by the department? - CIT (A) held that the interest under Section 244(A) is taxable, pending final determination of the assessments by the Income-Tax Authorities / Appellate Authorities - HELD THAT:- Undisputed facts are that the assessee has received interest u/s.244A of the Act on refund and total interest is Rs.48,46,557/-. The ld.counsel for the assessee stated that this taxability of interest u/s.244A of the Act was allowed in favour of assessee by ITAT in assessment year 1984-85 but he very fairly conceded that this issue is covered against assessee in assessee’s own case [2009 (3) TMI 901 - ITAT CHENNAI] for assessment year assessment years 2001-02 & 2002-03. Since, the issue is covered in favour of Revenue and against assessee, respectfully following the Tribunal’s decision for assessment years 2001-02 & 2002-03, we dismiss this issue of assessee’s appeal. Disallowance of business expenditure to the extent of 75% and allowing only 25% - CIT-A disallowing the claim for extra-ordinary business expenditure as it is incurred out of commercial expediency and for the purpose of the business of the appellant - HELD THAT:- We noted that the CIT(A) has not doubted the purpose of business i.e., purposes but he has estimated for the reason that the assessee has not maintained separate accounts in respect of these expenditures and the details of employees or visiting officials are not provided. Accordingly, he restricted the allowance of expenditure at 25% and confirmed disallowance of 75% of expenditure. Even now before us, the assessee could not substantiate its claim beyond allowing of expenditure at 25% as allowed by CIT(A). Hence, we dismiss this issue of assessee’s appeal and confirm the order of CIT(A). Nature of expenditure - addition of write off of investments made in Ponni Sugars (Orissa) Ltd, claimed by assessee as commercial expediency and business compulsion but authorities below considered this as capital in nature - assessee has made investment in Ponni Sugars (Orissa) Ltd. in the equity capital, non-convertible debentures and zero coupon redeemable preference shares - HELD THAT:- From the above facts and the decision of Hon’ble Madras High Court in the case of Tamilnau Industrial Investment Corp. Ltd. [2017 (7) TMI 1048 - MADRAS HIGH COURT] and Electronic Corporation of Tamilnadu Ltd., [2018 (12) TMI 47 - MADRAS HIGH COURT] we are also of the view that the claim of loss accruing or arising as investment in equity shares, non-convertible debentures and zero coupon redeemable preference shares is not capital loss but eligible for deduction in computation of business income as business loss, as held by Hon’ble Madras High Court in the case of Electronic Corporation of Tamilnadu Ltd., for the sale of shares and amount advanced by assessee to various industries towards working capital, the real character of the transaction was those akin to loans and not equity investment. Respectfully following Hon’ble Madras High Court decision in the above two cases, we reverse the orders of lower authorities and allow this issue of assessee’s appeal.
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