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TMI Blog2015 (5) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of this case to retain control or as part of a strategic investment of the assessee/company, such expenses – by way of interest outgo would have to be treated under Section 36 (1) (iii) and not under Section 57. The matter is, therefore, remitted to the AO for full appraisal of the fact situation and findings in the light of our conclusions. If, as a result of the AO’s determination, it is found that such expenditure is incurred, the net expenditure is obviously to be taken into consideration under Section 80M of the Act in the facts of the present case. - Decided in favour of assesse for statistical purposes. - ITA 54/2000 - - - Dated:- 14-5-2015 - S. Ravindra Bhat And R. K. Gauba,JJ. For the Appellant : Mr. Ajay Vohra, Sr. Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 57 of the Income Tax Act, 1961. In doing so, the ITAT rejected the assessee s contention that such interest by itself amounted to business expenditure and was properly admissible under Section 36 (1) (iii) of the Income Tax Act, 1961. 4. It is agreed by counsel for the parties that the decision of the Supreme Court in Distributors (Baroda) Pvt. Ltd. v. Union of India Ors., 155 ITR 120 concludes the first issue inasmuch as it is the net dividend which is required to be taken into account under Section 80M read with Section 80AA of the Income Tax Act, 1961. 5. The second question according to us does not arise at all - a view shared by counsel for both the parties. 6. Counsel for the assessee relies upon the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gujarat High Court in Addl. CIT v. Laxmi Agents P. Ltd. (1980) 125 ITR 227 to say that in such circumstances even though the head of income derived, i.e., dividend would have to be dealt with and assessed under Section 56 (2) (i) of the Act, nevertheless the character of the income being essentially business in nature, the expenditure incurred has to be treated as such under Section 36 (1) (iii). He further relied upon the decision of the Calcutta High Court in CIT v. Rajeeva Lochan Kanoria, (1994) 208 ITR 616 where in somewhat similar circumstances, the Court upheld the assessee s contention that such expenditure, i.e., interest on borrowings had to be dealt with under Section 36 (1) (iii) and not under Section 57. The Calcutta High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing (P) Ltd. v. CIT (1971) 80 ITR 21 and Brooke Bond Co. Ltd. v.CIT (1986) 162 ITR 372 are authorities that the heads of income enumerated in the Income Tax Act in Section 14 do not denote their essential characteristics. In other words that a business or an individual receives some amount which may be assessed as income of a particular kind would not be conclusively determinative of that character. In the facts of the present case, that principle, in the opinion of the Court, would squarely apply. If indeed the assessee had invested and subscribed to the rights issue in order to retain the control it originally did in Eicher Tractors Ltd, it can still be said that the expenditure was towards promotion of business and, therefore, properly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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