2014 (9) TMI 727

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..... admitted the appeals on the following substantial questions of law:- "(i) Whether on the facts and in the circumstances of the case, the I.T.A.T. have erred in law in holding that the unabsorbed business loss of the Unit namely M/s Meerut Oil and Chemicals (Pvt.) Ltd. Could be set off against the income of other Unit M/s Translam Ltd. and the said finding is not against the proviso below Clause (i) of the Sub Section (1) of the Section 72 of the Act? (ii).Whether on the facts and in the circumstances of the case, the I.T.A.T have erred in holding that the interest on borrowed capital used for Capital-work-in progress was deductible and the said finding is not against the Explanation 8 to Section 43 of the Act? (iii). Whether on the fact .....

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..... inued. For finding out if it is the same business the decisive test is unity of control, common management and common control of business and not the nature of the two lines of the business." 7. In the instant case, production of edible oil unit at Gajraula was temporarily suspended, because of losses and as a business expediency, it was leased out. However, lease was terminated before due date and the production was reverted back, but unfortunately, because of loss it was leased out again. The temporary suspension of business does not convert the 'business income' into 'income from other sources'. 8. Further, it appears that the A.O. has already treated lease rent as business income. When it is so then the set off of busi .....

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..... allowable deduction under section 36(i)(iii) of the I.T. Act. 13. Considering the totality of the facts and circumstances of the case, we are of the view that the borrowed funds was utilized for expansion of the business and the interest paid thereupon is allowable. The nature of utilization of funds makes no difference as during the assessment year under consideration, no new Unit was started by the assessee. 14. In view of the above discussions, the orders of the appellate authorities are hereby sustained. 15.The next grievance of the Department (question no.3) is pertaining to the addition of Rs. 9,82,389/- (wrongly mentioned in the substantial questions as Rs. 9,82,3891/-) regarding the trading result. 16. After hearing both the par .....

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