TMI Blog2006 (12) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... hares was mainly for acquiring controlling rights in another company ? While considering the issue raised in the question, the Tribunal has considered the aspects as under : 4. The learned counsel for the assessee contended that the issue is covered in favour of the assessee in one of the associate group concerns for the same Asstt. Year 199697 in ITA No.867/Ahd/2001, ACIT vs. Ataku Holdings Pvt. Ltd. order dated 15.9.2003. Facts are similar, which is evident from the record that the name of this sister concern Ataku Holdings Pvt. Ltd., has been referred by the AO on page No.7, Para( iv) of his order. The Tribunal allowed similar claim of interest as business expenditure by following observations. 6. I have considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wami Bank Ltd. (1963) 57 ITR 306(SC) : the scheme of the IT Act is that income tax is one tax. Section 6 of the IT Act, 1922, classifies the taxable income under different heads for the purpose of computation of the net income of the assessee. Though for the purpose of computation of the income, interest on securities is separately classified, income by way of interest from securities does not case to be part of income from business if the securities are pat of the trading assets. Whether a particular income is pat of the income from a business falls to be decided not on the basis of the provisions of section 6 but on commercial principal. 6.1 A useful reference may also be also made to the judgment of the Hon'ble Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for the purpose of profits and gains from business. 6.2 The facts relating to the case of Ormerods (India) Pvt. Ltd. Vs. CIT (36ITR329 (Bom) are almost similar with the facts of the assessee's case the Hon'ble Bombay High Court has held that the interest expenditure incurred on capital borrowed for purchase of shares was allowable as deduction under the corresponding provisions contained in the IT Act, 1992. The said judgment of the Bombay High Court has been approved by the Hon'ble Supreme Court as already stated herein before. The view taken by the CIT (A) is fully fortified by the aforesaid judgment of Hon'ble Bombay High Court in the case of Ormerods (India) Pvt. Ltd. (supra). 6.3 In view of the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of making or earning such income, profits or gains do not mean motive for the transaction, much less scan it mean ulterior motive or ulterior object. The Court held that as the investments were made for the purpose of deductible under Section 12(2) of the Act. ............ ............ In Commissioner of Income Tax v. H.H.Maharani Vijaykuverba Saheb of Morvi (1975) 100 ITR 67 (Bom.), a Division Bench of the Bombay High Court held that the deduction which is permissible under subsection (2) of Section 12 is an expenditure incurred solely for the purpose of making or earning the income which has been subjected to tax and the dominant purpose of the expenditure incurred must be to tax and the dominant purpose of the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ormerods (India) Pvt. Ltd has been applied, which has been approved by the Hon'ble Supreme Court, in view of these facts, we hold that the assessee's case is covered in favour of the assessee by the ITAT judgment in the case of Ataku Holdings Pvt. Ltd., a group concern, respectfully following the same, we uphold the order of the CIT(A) allowing interest as business expenditure. Since we allow the claim of assessee, there is no necessity to go into alternate plea of the assessee. 7. In the result, Revenue's appeal is dismissed. The CIT (Appeal) as well as the Tribunal both have found that borrowings were for the purpose of business. Whether the borrowings were for the purpose of business or not, is basically based o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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