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CIT Versus Williamson Magor & Co. Ltd.

2015 (5) TMI 6 - CALCUTTA HIGH COURT

Disallowance of interest u/s 36(1)(III) - interest under charged by the respondent/assessee to the extent of 5% on borrowed capital given on loan to its associate concerns - ITAT allowed the claim - Held that:- The question do not really arise for consideration because the view taken by the learned Tribunal is evidently based on a judgement of the Delhi High Court in the case of CIT v. Sahani Silk Mills P. Ltd. reported in (2001 (4) TMI 27 - DELHI High Court ).

Disallowance of expendi .....

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was an allowable deduction.

Disallowance of legal fee paid and legal charges - ITAT allowed the claim - Held that:- It is not in dispute that the expenditure was, in fact, incurred. The only point was that the payment was in connection with services rendered and billed for on 28th February, 1997 and therefore, the expenditure could not be allowed in a subsequent year but that question has not been given much importance by the learned Tribunal for the simple reason that an appeal relat .....

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TMI 52 - GUJARAT High Court)

Disallowance of sum paid to employees under Voluntary Retirement Scheme - ITAT allowed the claim - Held that:- The question does not really arise for consideration because the money spent by the assessee in meeting the liability of voluntary retirement was recovered from the subsidiaries. The money so recovered has been offered for taxation and has been taxed as income arising from other sources whereas the expenditure incurred on account of voluntary reti .....

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dicating that the borrowed capital was not utilized for the purpose of earning exempt income. In the absence of such a finding the disallowance could not have been deleted. Therefore, to that extent, the judgement of the learned Tribunal is set aside and the matter is remanded to the assessing officer.

Addition of Mesne Profit - ITAT deleted addition - Held that:- The question is again an outcome of non-application of mind because the order for payment of mesne profits attained finali .....

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ness. The view taken by the learned Tribunal is evidently a possible view and no reason is forthcoming why is the same perverse. - ITA No. 799 of 2004 - Dated:- 8-4-2015 - Girish Chandra Gupta And Arindam Sinha JJ. For the Appellant : None For the Respondent : Mr. R.N. Bajoria, Sr.Advocate Mr.A.Gupta,Advocate The Court: The appeal was presented on 23rd November, 2004. Thereafter, the appellant did not take any step whatsoever. The appeal has not as yet been admitted. On 13th January, 2015, the a .....

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ime. Everytime, the matter was called on, the learned advocate for the respondent was found to be present but the learned advocate for the appellant was not present. In the circumstances, learned advocate for the respondent was requested to give a notice to the learned advocate for the appellant. Such notice was given. A duly receipted photocopy of such notice has been put on record by Mr. Bajoria, learned Senior advocate appearing on behalf of the respondent. Today, the matter is appearing unde .....

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s of the case, the Learned Income Tax Tribunal erred in law in deleting the disallowance of ₹ 71,53,542 for the Assessment year 1998-1999 and ₹ 2,92,99,950.00 for the Assessment year 1999-2000 on account of interest made by the Assessing officer proportionately on prorata basis and confirmed by the Commissioner of Income Tax (Appeals) under Section 36(1)(III) of the Income Tax Act, 1961 being the interest under charged by the respondent/assessee to the extent of 5% on borrowed capita .....

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the deduction under Section 36(1)(III) of the said Act? c) Whether in the facts and in the circumstances of the case, the Learned Income Tax Tribunal erred in law in deleting the disallowance of ₹ 3,75,000.00 during the Assessment year 1998-1999 being the expenditures incurred, by the respondent/assessee as the flagship company purported to promote the corporate image of the group companies, in sponsoring the races held by Royal Calcutta Turf club and not for any business carried on by the .....

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of the case, the Learned Income Tax Tribunal erred in law in deleting the disallowance of ₹ 50,000.00 out of ₹ 82,870.00 during the assessment year 1998- 1999 on account of the legal charges incurred by the respondent/assessee for the amalgamation of its two subsidiary companies namely Desai Investment Limited and Fairlie Place Investment Limited by holding the same as a revenue expenditure of the respondent/assessee? f) Whether in the facts and in the circumstances of the case, the .....

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in the facts and in the circumstances of the case, the Learned Income Tax Tribunal erred in law in deleting the disallowance of ₹ 4,03,44,000.00 paid by the respondent/assessee to its employees during the assessment year 1999-2000 under Voluntary Retirement Scheme ignoring the Board Circular dated 23rd January 2001 referred to by the Assessing Officer and the provisions made under Section 35DDA of the Income Tax Act, 1961 and without considering the enduring nature of benefit therefrom de .....

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clusion that borrowed capital was not used by the respondent/assessee for investment in shares? i) Whether in the facts and in the circumstances of the case, the Learned Income Tax Tribunal erred in law in deleting the addition of Mesne Profit, due to the respondent/assessee from Food Corporation of India, from income for the respondent/assessee during the assessment years 1998-1999 and 1999-2000 duly confirmed by the Commissioner of the Income tax (Appeals) and in directing the inclusion thereo .....

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n by the learned Tribunal is evidently based on a judgement of the Delhi High Court in the case of CIT v. Sahani Silk Mills P. Ltd. reported in (2002) 253 ITR 294. The question no.(c) pertains to the view taken by the learned Tribunal on the basis of a judgement of Delhi High Court in the case of Addl. Commissioner of Income-Tax v. Delhi Cloth and General Mills Co. Ltd. (1983) 144 ITR 280 wherein it was held that the expenditure incurred by the assessee in organising tournaments was an allowable .....

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t year but that question has not been given much importance by the learned Tribunal for the simple reason that an appeal relating to the year to which the expenditure pertained was also pending and therefore there was, in substance, no reason why the expenditure should not have been allowed. Therefore, the question nos.(d) and (e) are of no substance altogether. So far as the question no.(f) is concerned, the learned Tribunal in allowing entrance fees paid to the clubs relied on the judgement of .....

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s incongruity was removed by the learned Tribunal. Therefore, this question is really based on non-application of mind. The question no.(h) appears to have some substance in it. The learned Tribunal has deleted the disallowance following its judgement for the earlier years. But no finding was arrived at by the learned Tribunal indicating that the borrowed capital was not utilized for the purpose of earning exempt income. In the absence of such a finding the disallowance could not have been delet .....

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ity on 30th July, 1999. Therefore, the same can only be assessable in the year 2000-2001. The learned Tribunal did the correct thing. But the appellant has framed the question without applying any mind. The question no.(j) is equally an outcome of non-application of mind. The immovable property has partly been let out and there were other properties rented by the assessee for the purpose of its business. The learned Tribunal advanced the following reasoning amongst others:- However, the A.O. has .....

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