TMI Blog2001 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... and yet the assessee exercised the option the other way by transferring shares which had no connection with the making or earning of the income. - we do not find any infirmity with the order of the Tribunal and the Tribunal was right in holding that the assessee's claim on account of interest was not allowable. - - - - - Dated:- 11-12-2001 - Judge(s) : B. C. PATEL., D. A. MEHTA. JUDGMENT The judgment of the court was delivered by D.A. MEHTA J.-The Income-tax Appellate Tribunal, Ahmedabad Bench "B", has referred the following question for the opinion of this court under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"): "Whether, on the facts and in the circumstances of the case, the claim on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 977, and it is an undisputed fact that the entire share capital was transferred to one Ofisade Pvt. Ltd. at the book value on February 14, 1977. It was in the backdrop of this fact situation that the interest was disallowed by the lower authorities as stated hereinabove and such disallowance came to be confirmed by the Tribunal. Mr. B.D. Karia, the learned advocate for the applicant-assessee, submitted that the company was carrying on business of investments, i.e., it was an investment company, and it was out of commercial consideration, that it had entered into the aforesaid transactions and incurred liability to pay interest on the borrowings made by it. He submitted that the transfer of the entire shareholdings of Telerad Pvt. Ltd., wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue, relied upon the order of the Tribunal as well as the orders of the authorities below and submitted that all the three authorities had found on the facts that the assessee had failed to establish nexus between the expenditure incurred and the purpose for which the expenditure had been incurred, viz., making or earning of the income. He further submitted that from the facts available on record it was apparent that the purpose of borrowing was not the sole purpose and hence in the light of the test laid down by this court in the case of Smt. Virmati Ramkrishna v. CIT [1981] 131 ITR 659 (Guj) (Appex), there was no case made out to interfere with the decision of the Tribunal. Mr. Qureshi also relied upon the decision of this court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he light of the settled legal position: it is not necessary that any income must actually have been earned for the purpose of claiming deduction, do the facts of the case go to show that even that condition is applicable? The Tribunal has found from the facts that the source of income (shares) has altogether disappeared. In relation to this finding Mr. Karia during the course of his submissions contended that the Tribunal had committed an error in recording this finding because what had happened was that the assessee-company had converted from one form of investment to another form of investment when the shares of Telerad Pvt. Ltd., were transferred to Ofisade Pvt. Ltd., and it was stipulated as per the agreement that the consideration shal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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