2012 (4) TMI 698 - AT - Income Tax

Summary

Issues involved: Appeal against disallowance of interest expenses u/s 57(111) for assessment years 2001-02 and 2002-03.

For AY 2001-02:
The assessee appealed against the disallowance of interest amounting to Rs. 32,30,685. The Tribunal dismissed the appeal initially, but the Hon'ble Bombay High Court remanded the issue for fresh consideration. The High Court observed that the investments were made for earning dividends, distinguishing the case from previous judgments. Following various case laws, including Moodi Pvt Ltd and Ormerods (India) P. Ltd, the Tribunal allowed the claim of the Assessee, stating that the interest paid on borrowings for the purchase of shares was allowable as a deduction under relevant sections of the Income Tax Act. The Tribunal held that the provisions of the Act would be more beneficial to the assessee, leading to the deletion of the disallowance of interest sustained by the CIT(A).

For AY 2002-03:
The issue of disallowance of interest expenses was considered in line with the decision for AY 2001-02. The Tribunal, following the previous decision, allowed the claim of the Assessee for AY 2002-03 as well. The Tribunal held that the disallowance of interest sustained by the CIT(A) deserved to be deleted, as the facts and circumstances were identical to those of AY 2001-02. Consequently, the appeal for AY 2002-03 was allowed in favor of the assessee.

Separate Judgment by Judges:
No separate judgment was delivered by the judges in this case.