Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2010 (1) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (1) TMI 86 - HC - Income TaxNot deductible as bad debts or Business Expenditure under section 36(1)(vii), 37,– Business Expenditures – The assessee in the course of its activity of manufacture and sale of beer had furnished guarantee for repayment of certain loans and advances which its subsidiaries companies and their business associates had raised from banks and financial institutions and on the failure of the subsidiary companies or the business associates to repay the amounts on the premise that they have become incapable of repayment, reimbursed the guarantee amount to the creditors and claimed that amount as an expenditure under section 36 or 37 for the assessment year 1996-97 and 1997-98. The assessee also claimed deduction of amounts advanced to associated and subsidiary companies for purchase of shares. The claims were rejected by the Assessing Officer and the Commissioner (Appeals) after considering the material of records the Tribunal allowed them. -The assessee claimed that the amount spent to obtain legal advice on the feasibility of acquiring another company was revenue expenditure. The Assessing officer and the Commissioner (Appeals) disallowed the claim but the tribunal allowed it. - The assessee had advanced sums to its business associated and the agreement specified the rate of interest. The assessee submitted that it had not received such interest and it was not assessable. The Assessing officer and Commissioner (Appeals) held that the amount was assessable but the Tribunal held that it was not assessable. In this case Karnataka High Court-held that except for question related to the obtaining of feasibility/viability report for purchasing national Sirghum Breweries, South Africa was a business expenditure all other questions for this assessment year and all questions for the assessment year 1997-98 are answered in favour of the Revenue and against the assessee. The order of the assessing authority as affirmed by the first appellate authority in so far as it relates to all other findings other than the finding relating to the fee towards obtaining feasibility report for acquiring brewery unit at South Africa are all restored and affirmed. The order of the Tribunal is reversed to the extent mentioned above. While I. T. A. No. 492 of 2001 is allowed in part levying cost of Rs.10,000 on the respondent in favour of the Revenue, I. T. A. No. 89 of 2003 is allowed in full levying cost of Rs. 5,000 on the respondent in favour of the Revenue.Cost to be paid within four weeks from today, failing which the Revenue can realize the amount as part of recovery on its own.
|