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Commissioner of Income Tax-10 Versus Infrastructure Leasing & Financial Services Ltd.

2016 (4) TMI 312 - BOMBAY HIGH COURT

Fees paid to Clubs - revenue v/s capital expenditure - Held that:- The issue of membership fees paid to the Club being allowed as Revenue expenditure stands has concluded against the Revenue and in favour of the Respondent-Assessee by the decision of this Court in Otis Elevator Co. (India) Ltd. V/s. Commissioner of Income Tax (1991 (4) TMI 53 - BOMBAY High Court ) .

Deductibility of interest payments - these payments were capitalized in the books of the company - Held that:- The provi .....

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uisition/purchase of capital asset till such time it is first put to use in the subject assessment year.Tribunal was correct in upholding the deductibility of interest payments.

Qualification of accessories to a windmill for 100% depreciation - Held that:- This Court on almost identical facts in CIT V/s. CTR Manufacturing Industries Ltd. (2016 (4) TMI 265 - BOMBAY HIGH COURT) has dismissed the Revenue’s Appeal from the order of the Tribunal allowing the claim for depreciation at the f .....

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has urged the following questions of law for our consideration: - (1) Whether on the facts and circumstances of the case and in law, the Tribunal was correct in allowing as revenue expenditure fees paid to Clubs, whereas the said expenditure cannot said to be wholly and exclusively for the purposes of business? (2) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in upholding the deductibility of interest payments ignoring the fact that these payment .....

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ands has concluded against the Revenue and in favour of the RespondentAssessee by the decision of this Court in Otis Elevator Co. (India) Ltd. V/s. Commissioner of Income Tax (1992) 195 ITR 682. (ii) In the above view, question no.1 as formulated does not give rise to any substantial question of law. Thus not entertained. 4. Regarding Question no.2 : (a) The Respondent-Assessee in its return of Income had claimed interest expenditure of ₹ 10.85 crores as deduction under Section 36(1) (iii) .....

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hase of capital asset was deleted. Appeal of the Respondent-Assessee was allowed. (c) Being aggrieved, the Appellant-Revenue preferred an Appeal to the Tribunal. In Appeal the Tribunal by its impugned order dismissed the Appellant-Revenue's Appeal. The impugned order of the Tribunal relied upon its orders passed for A.Ys. 1993-94 and 1994-95 upholding the claim for deduction of interest paid for acquisition of capital asset under Section 36(1)(iii) of the Act. (d) Mr. Pinto, learned counsel .....

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rowed capital is allowable as deduction and the purpose for which the borrowing is made was irrelevant while considering the allowing of interest expenditure as deduction under Section 36(1)(iii) of the Act. (e) In any view, the proviso to Section 36(1)(iii) of the Act which prohibits claiming interest expenditure in respect of amounts borrowed for acquisition of capital assets till such time as it is first put to use has to be capitalized was introduced into the Act by Finance Act 2003 with eff .....

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. 5. Regarding Question no.3 : (a) The Respondent-Assessee had in its return of income claimed depreciation on windmills at 100%. The Assessing Officer allowed depreciation on windmills at 25%. On further appeal, the CIT(A) did not disturb the findings of the Assessing Officer. (b) On further appeal by the Respondent-Assessee to the Tribunal, the impugned order of the Tribunal allowed the claim for depreciation at 100% in respect of windmill by relying upon a decision of its Coordinate Bench in .....

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