2016 (10) TMI 628 - HC - Income Tax

Allowability of amount of interest and financial charges under Section 36(i)(iii) - Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that amount of interest and financial charges is allowable under Section 36(i)(iii) of the Act ? - Held that - Question is covered by judgment of Commissioner of Income Tax, Moradabad and another Vs. M/s Radico Khaitan Ltd., Bareilly Road, Rampur 2015 (9) TMI 1479 - ALLAHABAD HIGH COURT wherein it has been held that Department cannot be permitted to question issues which were accepted by it in the previous years and stood answerd in favour of Assessee against Department by relying on the decision in DCIT Vs. Core Health Ltd.,(2008 (2) TMI 8 - SUPREME COURT OF INDIA ).

Summary

Issues:

1. Allowability of interest and financial charges under Section 36(i)(iii) of the Income Tax Act.
2. Restoration of an issue to the Assessing Officer (AO) for decision based on a previous year's decision.
3. Allowability of expenses and depreciation on a guest house under Section 37(4).
4. Allowability of deduction under Section 80-I without reducing the deduction under Section 80-HH.

Analysis:

1. The appeal raised the issue of whether interest and financial charges were allowable under Section 36(i)(iii) of the Income Tax Act. The Tribunal had held in favor of the Assessee. The counsel referred to a previous judgment to support their argument that the Department cannot question issues previously accepted. Citing relevant case law, the Tribunal upheld the decision in favor of the Assessee.

2. The second issue involved the restoration of a matter to the AO for decision based on a previous year's judgment. The Tribunal found that this direction did not prejudice the Revenue but aimed to protect its interests. Consequently, the Tribunal answered this question in favor of the Assessee.

3. The third issue concerned the allowability of expenses and depreciation on a guest house under Section 37(4) of the Income Tax Act. The Tribunal ruled in favor of the Revenue, stating that the provisions of Section 37(4) were not attracted in this case, thereby answering this question in favor of the Revenue.

4. The final issue was about the allowability of deduction under Section 80-I without reducing the deduction under Section 80-HH. The Tribunal held that the deduction under Section 80-I was allowable on the gross total income without reducing the deduction under Section 80-HH. Consequently, this question was answered in favor of the Assessee.

In conclusion, the High Court dismissed the appeal after addressing each issue individually and providing detailed reasoning based on applicable laws and precedents.