TMI Blog2019 (1) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... rom interest received. Interest of ₹ 1,78,03,962 /- cannot be deducted/set-off from interest paid at the performance guarantees for the two blocks were given by the respondent- assessee. Interest earned on the FDRs obtained to procure the performance bank guarantees was connected with the two oil blocks. The Tribunal has mentioned that the Commissioner of Income Tax (Appeals) had allowed deduction under Section 35D thereby indirectly accepting that assessee had commenced business. the assessee had advanced more than ₹ 12.11 Crores to M/s Jubilant Capital Private Limited in furtherance to the business transfer agreement to meet the cash calls for participatory interest in the Ankleshwar Block. Thus, the finding that the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Limited and M/s Jubilant Securities Private Limited for acquiring their 20% and 35% participatory interest in Ankleshwar Block and Golaghat Block, respectively. However, due to formalities and want of approvals, actual transfer of interest had not materialized. In the absence of business operations, interest of ₹ 1,88,98,763/- paid to a sister concern M/s Jubilant Energy (Kharsang) Private Limited was not allowable as a revenue expense and should be capitalized. Similarly, interest of ₹ 1,78,03,962/- on the Fixed Deposits Receipts ( FDRs , for short) in bank and Inter-Corporate Deposits ( ICDs , for short) with sister concerns earned by the respondent-assessee were taxable under the head income from other sources and not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011, which amount it was stated was advanced to M/s Jubilant Capital Private Limited in the period relevant to the Assessment Year 2008-09. The amount advanced to M/s Jubilant Capital Private Limited was not from the funds procured by the respondent-assessee under the ICDs. 5. As per the respondent-assessee, additional sum of money of ₹ 5.20 Crores advanced to M/s Jubilant Capital Private Limited on 25th March, 2011 was paid/advanced from FDRs made in the earlier years and from reserves and surplus from share capital and share premium. On 25th March, 2011 the outstanding balance of loan from Jubilant Energy (Kharsang) Private Limited was ₹ 1 Crore only. Thus, the finding of the Assessing Officer that interest bearing funds we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Private Limited. It was observed that the respondent-assessee had incurred expenses of more than ₹ 2,00,000/- on operations and support staff etc. The Tribunal has opined that the business had commenced as the respondent-assessee had entered into business transfer agreement dated 1st April, 2007. It could be urged that this finding is not detailed, albeit the respondent-assessee had furnished performance bank guarantee for M/s Jubilant Capital Private Limited and M/s Jubilant Services Private Limited. Thus, the performance guarantees for the two blocks were given by the respondent- assessee. Interest earned on the FDRs obtained to procure the performance bank guarantees was connected with the two oil blocks. The Tribunal has mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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