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2015 (4) TMI 624 - GUJARAT HIGH COURT

2015 (4) TMI 624 - GUJARAT HIGH COURT - TMI - Transfer to reserve fund - whether the amount transferred to reserve fund account as per provisions of Sec. 67 of the Gujarat State Cooperative Societies Act, 1957 was not a diversion of income at source by overriding title? - transfer to reserve fund cannot be treated as business expenditure and allowed deduction u/s 28/37 as held by Tribunal - Held that:- The two questions, at the instance of the assessee, stands concluded by the decision of the Ap .....

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o use the reserve fund for the business of the society that the question about investing the reserve fund in the specified category of investments and thereafter utilizing the same for the objects specified by the State Government can arise. Hence, not only is there no diversion of income by overriding title but in fact there is no outgoing of funds from the domain of the assessee society. In fact, the profits at the specified percentage are set apart so as to be available to the society for use .....

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r can such transfer be treated as a business expenditure deductible either under Section 28 or Section 37 of the Act. See Gujarat CO-OP. Milk Marketing Federation Ltd Versus DY. Commissioner Of Income-Tax [2015 (4) TMI 621 - GUJARAT HIGH COURT] - Decided in favour of the Revenue. - TAX APPEAL NO. 657 of 2007 With TAX APPEAL NO. 324 of 2008 With TAX APPEAL NO. 1791 of 2008 TO TAX APPEAL NO. 1794 of 2008 - Dated:- 25-3-2015 - M.R. SHAH AND MR. S.H.VORA, JJ. FOR THE APPELLANT : MRS SWATI SOPARKAR, .....

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umstances of the case, the ITAT was right in holding that the amount transferred to reserve fund account as per provisions of Sec. 67 of the Gujarat State Cooperative Societies Act, 1957 was not a diversion of income at source by overriding title? (ii) Whether in the facts and under the circumstances of the case, the ITAT was right in holding that transfer to reserve fund cannot be treated as business expenditure and allowed deduction u/s 28/37 of the Income Tax Act, 1961? 2. Today, when all the .....

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y this Court in ITR No.65 of 1997. In para 8 and 9 of the above decision, the Division Bench has observed and held as under: 8. Having heard the learned advocates it is apparent that the issue raised by the two questions, at the instance of the assessee, stands concluded by the aforesaid decision of the Apex Court in the case of Associated Power Co. Ltd. Vs. Commissioner of Income tax (supra). Furthermore, as can be seen from provisions of Section 67(2) of the Cooperative Societies Act the quest .....

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und for the business of the society that the question about investing the reserve fund in the specified category of investments and thereafter utilizing the same for the objects specified by the State Government can arise. Hence, not only is there no diversion of income by overriding title but in fact there is no outgoing of funds from the domain of the assessee society. In fact, the profits at the specified percentage are set apart so as to be available to the society for use in the business of .....

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