2013 (7) TMI 701 - GUJARAT HIGH COURT

Disallowance u/s 14A - Expenditure for dividend income - Tribunal cancelled disallowance since no expenditure proved - Held that:- It transpires from record that the assessee's own funds were at higher than the investment made by it and with nothing to indicate that the borrowed funds were utilised for the purpose of investment in shares and for earning dividends - Both the CIT (Appeals) and the Tribunal have noted that the assessee had sufficient funds available with it, which was more than the amount it invested for earning the dividend income, both these authorities have correctly approached the issue by setting aside the order of disallowance under Section 14A of the Act in respect of interest expenditure - Decided against Revenue.

Deduction u/s 10(2)(xv) - Corporate Debt Restructuring - Tribunal deleted disallowance - Held that:- For the waiver of the loan, the payment has been made to the financial consultants. This was for the purpose of business and the same was held to be allowable under Section 37(1) of the Act - Once the expenditure is held to be revenue in nature incurred wholly and exclusively for the purpose of business, it can be allowed in its entirety in the year in which it is incurred - when the spreading is done for over a period of six years and as the assessee respondent has no objection to such revenue expenditure being spread out, though it could have insisted for this amount to be allowed in the year under consideration, with no such objection having been raised, the Revenue would not succeed in this issue as the expenditure is held to be revenue in nature - Following decision of Madras Industrial Investment Corporation Limited Versus Commissioner of Income-Tax [1997 (4) TMI 5 - SUPREME Court] - Decided against Revenue.

Income u/s 28(iv) - Held that:- If an amount is received in the course of a trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right. When such a thing happens, common sense demands that the amount should be treated as income of the assessee - As the assessee company was not found to be carrying on the business of obtaining loan, the Court held that the remission of such loan by the creditors was not a benefit arising out of such business and, therefore, such remission of unsecured loan was not taxable at the ends of the assessee - Following decision of CIT v. Chetan Chemicals Pvt. Ltd. [2001 (10) TMI 12 - GUJARAT High Court] - Decided against Revenue.