TMI Blog2006 (8) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... e as stipulated in the agreements between the stevedores and the principals. Both the authorities found that there is no breach of law in making payments which were essentially incidental to the carrying on of the appellant's business with a view to earning profits. The finding given by both the authorities is based on valid materials and evidence and there is no error or legal infirmity in the order of the Tribunal and hence, does not require interference. Thus, no substantial question of law arises for consideration of this court and hence, the appeal with respect to question No.3 is dismissed. Interest paid on the borrowings from the subsidiary company - HELD THAT:- There is a factual finding that the assessee had its own free reserves and funds used mainly for running expenses. Also, there was no material produced by the Revenue to establish that the money borrowed was actually given to its subsidiaries. Hence the conclusion of the Tribunal is based on material and evidence and it does not suffer from legal infirmity to warrant interference. In view of the above, no substantial question of law arises for consideration of this court and hence, the appeal qua question No.5 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision had to be allowed? I. T. A. Nos. 1612 and 1922/Mds/94, 2657/Mds/95, 2600/Mds/96 for the assessment years 1990-91, 1991-92, 1992-93, and 1993-94: 5. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the interest paid on the borrowings from the subsidiary company is an allowable deduction when the assessee had enough funds? I. T. A. Nos. 1919/Mds/94, 2676 and 43 to 47/Mds/96 for the assessment years 1991-92, 1986-87 to 1988-89, 1992-93 and 1993-94: 6. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that inclusion of interest from Sundaram Industries for the amounts advanced by the assessee had to be deleted? I. T. A. No. 2676/Mds/96 for the assessment year 1993-94: 7. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that interest paid towards the loan taken for acquiring Spic zero bonds, had to be allowed as a deduction while computing the income from other sources? 2. The assessee-company is carrying on business in agency, trading, engineering, stevedoring, clearing and forwarding, shipping etc. The assessment years involved are 1986-87, 1987-88, 1988-89, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. [2007] 290 ITR 196 holding that expenditure incurred on the issue of debentures is a permissible deduction under section 37 of the Act. 3.5. Learned counsel appearing for the Revenue has not produced any material or evidence to take a different view. The reasoning of the Tribunal was based on relevant materials and evidence and there is no error or infirmity in the order of the Tribunal to warrant interference. In view of the same, no substantial question of law arises for consideration by this court and hence, the appeal in respect of question No.1 is dismissed. Question No. 2: Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the mamool paid at harbour, customs, airport is to be allowed as a deduction? 4.1 This question pertains to the assessment years 1986-87, 1987-88, 1988-89, 1992-93 and 1993-94. For the relevant assessment years, the assessee claimed certain expenses incurred at harbour, customs, airport etc. as revenue expenditure. The Assessing Officer disallowed the expenditure. Aggrieved by the order, the assessee filed an appeal to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-company which is a registered employer of the Madras Dock Labour Board. The said amount was paid in cash to the workers of the Madras Dock Labour Board as incentives to speed up the stevedoring work. The Assessing Officer allowed only 50 per cent. of the amount by following the earlier order. Aggrieved by the order, the assessee filed an appeal to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) allowed the appeal. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Revenue filed an appeal to the Tribunal. The Tribunal dismissed the appeal filed by the Revenue and confirmed the order of the Commissioner of Income-tax (Appeals). 5.2. There is a factual finding by both the authorities that the payments were made in accordance with the list that was provided in the Dock Labour Board. The incentives paid do not exceed 3 per cent. of the gross receipts and also is a customary payment incurred over a number of years and accepted as genuine in earlier years by the Department. The payment was necessitated to utilise the full capacity of manpower from the workers, to avoid demurrage charges and to keep the contract commitmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal was right in holding that the interest paid on the borrowings from the subsidiary company is an allowable deduction when the assessee had enough funds? 7.1. This question pertains to the assessment years 1990-91, 1991-92, 1992-93 and 1993-94. The assessee had advanced an amount to M/s. Sundaram Industries. In the said advance, the assessee had not charged any interest. The said advances were made to provide working capital to the subsidiaries. The Assessing Officer calculated the interest at 12 per cent. on the minimum balance outstanding during each year and disallowed out of interest claim of the assessee. Against the disallowance, the assessee filed an appeal to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. Aggrieved by the order, the assessee filed an appeal to the Tribunal. The Tribunal allowed the assessee's claim. The Tribunal had given a finding that the assessee has a lot of business activity with the subsidiaries and was carrying on various activities through the subsidiaries. 7.2. There is a factual finding that the assessee had its own free reserves and funds used mainly f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a deduction from other sources being expenditure incurred for earning the same. (b) As the assessee is not a dealer in shares, the interest paid on loan borrowed is allowable as deduction and is not required to be capitalised. The Assessing Officer disallowed the appellant's claim for deduction of interest. Aggrieved by the order, the assessee filed an appeal to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) held that the assessee is entitled to deduction of interest and allowed the claim. Aggrieved, the Revenue filed an appeal to the Tribunal. The Tribunal dismissed the Revenue's appeal and confirmed the order of the Commissioner of Income-tax (Appeals). 9.2. Both the first appellate authority as well as the Tribunal have given a factual finding that the assessee is a flag-ship company carrying on worldwide business and the bonds were acquired for purposes of the business. The conclusion arrived at by the authorities was based on material and evidence and hence no substantial question of law arises for consideration by this court and hence, the appeal in regard to question No.7 is dismissed. In the result, the tax case is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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