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VIRENDRA R GANDHI Versus DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1 (4)

Interest disallowed under section 57(iii) - interest for the same borrowing has been allowed in the immediately preceding year - Held that:- It would not be equitable to permit the revenue to take a different stand subsequently in respect of the amounts which were the subject matter of previous years assessment. In our view, once the interest is allowed in the previous year and if there is no change in the condition then it can be disallowed in the current years assessment. Accordingly, the ques .....

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d order of the Income Tax Appellate Tribunal, Ahmedabad Bench C , Ahmedabad (For short, the Tribunal ) in ITA No.1002/Ahd/2003 dated 23.11.2007 for the assessment year 1996-97, whereby the appeal filed by the assessee was dismissed. 2. At the time of admitting this Appeal, following question of law was framed:- Whether on the fact and in the circumstances of the case, the interest of ₹ 10,08,191/- was rightly disallowed under section 57(iii) of the Income Tax Act, 1961 even when the intere .....

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disposed of accordingly. 4. Learned advocate for the respondent is not in a position to dispute the aforesaid position. 5. We have heard both the learned counsel and perused the record. While deciding Tax Appeal No.20 of 2004 along with Tax Appeal No.124 of 2005 on 27/11/2014, this Court observed as under:- 5. We have heard learned advocates for the the parties. It appears that while admitting these appeals the Court had directed to hear these appeals along with Tax Appeal No.230 of 2003 as the .....

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al Limited. The assessee filed a return of income on 31.08.1993 for the assessment year 199394, showing a loss of ₹ 4,76,271/. Thereafter, on 16.09.1993 a revised return of income was filed in which the total income declared was 48,799/. The return of income was processed under Section 143(1)(a) of the Income Tax Act. On 19th October, 1994, the Assessing Officer passed an order under Section 143(3) of the Income Tax Act and determined the total income of the assessee at ₹ 6,19,635/. .....

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lated the following question of law:- Whether, on the facts and circumstances of the case, the interest of ₹ 3,81,924/was rightly disallowed under Section 57(iii) of the Income Tax Act, 1961 even when the interest on the same borrowing had been allowed as a deduction in the immediately preceding assessment year ? 4. Mr. Shah, learned counsel for the appellant has taken us to the order of the Assessing Officer, Commissioner of Income Tax as well as the order of the Tribunal and submitted th .....

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under:- (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income 4.2. In support of his contention, he relied upon the decision of the Karnataka High Court in the case of Commissioner of Income Tax Vs. Sridev Enterprises, reported in 1992 ITR 165. 4.3. He also relied upon the decision of the Apex Court in the case of Commissioner of Income Tax Vs. Excel Industries Ltd. reported in 35 .....

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n of the Bombay High Court in the case of Kishinchand Chellaram Vs. Commissioner of Income Tax, Bombay CityIII, reported in 114 ITR, 645. 6. We have heard learned advocates for the parties and perused the material on record. In our view, the decision of the Karnataka High Court in the case of Sridev Enterprises(supra) is directly on the issue posed in this appeal. It is necessary to reproduce relevant paragraph of the above decision, which reads as under: We are in agreement with the view expres .....

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uring those years; this could be only on the assumption that those advances were not out of borrowed funds of the assessee. This finding during the previous years is the very basis of the deductions permitted during the past years, whether a specific finding was recorded or not. A departure from that finding in respect of the said amounts advanced during the previous year would result in a contradictory finding; it will not be equitable to permit the Revenue to take a different stand now in resp .....

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