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2016 (11) TMI 607 - MADRAS HIGH COURT

2016 (11) TMI 607 - MADRAS HIGH COURT - TMI - Interest on the amount borrowed for declaring dividend - allowability as deduction u/s 36(1)(iii)- Held that:- The learned counsel for the respondent/assessee placed before us bank statements of Axis Bank and Bank of India to the effect that as on the dates when the dividend was, in fact declared, there was a credit balance on account of prior foreign inward remittances. Thus, and the Learned Standing Counsel does not dispute this, the assesssee did .....

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rt ]- Decided in favour of assessee - Tax Case Appeal No. 549 of 2016 - Dated:- 7-11-2016 - Nooty Ramamohana Rao And Anita Sumanth, JJ. For the Appellant : Mr.T.R.Senthilkumar For the Respondent : Mr. Vijayaraghavan for M/s Subbaraya Aiyar JUDGMENT ( Judgment of the Court was delivered by Dr. Anita Sumanth., J ) 1. This Tax Case Appeal at the instance of the Revenue, challenges an order of the Income Tax Appellate Tribunal, Madras, dated 04.02.2015 in ITA No.1071/Mds/2013, raising the following .....

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of Assessment under Section 143 (3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') passed on 27.12.2010. Inter alia the Assessing Officer considered the question of applicability of Section 14A of the Act to the Assessment. Thereafter, proceedings for revision under Section 263 of the Act were initiated by the Commissioner of Income Tax-I, Coimbatore, by issue of show cause notice dated 28.02.2013 on the ground that the interest payable on borrowed capital utilized fo .....

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here had been adequate cash profits on the dates of declaration of dividend and in any event, the declaration of dividend was itself for the purpose of business. Thus, according to the assessee, expenditure incurred in connection therewith constituted an allowable deduction in terms of Section 36(1)(iii) of the Act. Overruling the objections of the Assessee, an order under Section 263 of the Act came to be passed on 22.03.2013 that was challenged in appeal before the Income tax Appellate Tribuna .....

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Standing Counsel for the appellant and Shri Vijayaraghavan, learned counsel for the respondent/ assesssee. 7. The learned counsel for the respondent/assessee placed before us bank statements of Axis Bank and Bank of India to the effect that as on the dates when the dividend was, in fact declared, there was a credit balance on account of prior foreign inward remittances. Thus, and the Learned Standing Counsel does not dispute this, the assesssee did have required resources internally to effect t .....

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