Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (9) TMI 437 - ITAT MUMBAIBusiness loss or Bad Debts - written off of advances – advances given for material supply – Held that:- Losses incidental to business are allowable as deduction despite there being no specific provision for the same. If there is a direct and proximate nexus between the business operation and the loss or it is incidental to it, then the loss is deductible, as without the business operation and all that is incidental to it, no profit can be earned [Remachandar Shivnarayan v. CIT [1977 (11) TMI 2 - SUPREME Court] - Case of the appellant falls under the business loss and not under the bad debts - The parameters for claim of business loss and the bad debts are different. - Decided in favor of assessee. Disallowance of interest expenditure u/s 36(1)(iii) of the Income Tax Act – Held that:- No interest bearing funds were utilized for advancing the sum to the subsidiary company or its related company on account of share application money - It was also noticed by the CIT(A) that the assessee has sufficient reserves i.e. Rs. 62.23 crore with the assessee - The finding of the CIT(A) remained uncontroverted that the Assessing Officer failed to prove the nexus between borrowings and subsequent advancing of loan to subsidiary company – Therefore relying upon the decision in the case of S.A.Builders [2006 (12) TMI 82 - SUPREME COURT ], the expenditure of interest has not been allowed – Decided against the Assessee. Depreciation on leased assets u/s 32(1) of the Income Tax Act – Held that:- Relying upon the decision of Supreme Court of India in the case of Shaan Finance (P) Ltd. v. CIT [1998 (3) TMI 8 - SUPREME Court], it was held that the ownership of the machines remained with the assessee and there is no scope for transferring the machines to the parties - Assessee-company fulfilled all the conditions laid down u/s 32 of the Act, therefore, the claim for depreciation is to be allowed – Decided in favor of Assessee. Interest income against bank guarantee or letter of credit – Held that:- Interests had been directly linked with the commercial activity of the assessee. When there is a commercial activity established, then, earning of interest or incurring of expenditure for earning the interest is to be treated as for business expediency – Therefore, the interest expenditure or interest income is treated for the purpose of business. Depreciation in respect of Time Sharing Unit – Held that:- Time sharing unit is intangible asset or an asset which make the assessee entitled for deduction on account of depreciation - If it is found that this is a capital asset then depreciation is allowable u/s 32 - Accordingly, issue is remanded back to the file of A.O. to examine the issue afresh.
|