9911796707
TMI Blog2013 (1) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 where the dividend income was taxable during this year. 3. During the assessment proceedings, Assessing Officer noted that assessee has taken loans from M/s. Kothari Metals & Alloys in earlier years at Rs. 46,12,514/-. These funds were invested in a company M/s. Kambare Chemicals (I) Pvt. Ltd. where the assessee was one of the Director. The assessee claimed interest payment of Rs. 6,24,613/- against the interest income and dividend income under section 57 (iii) of the I.T. Act. The Assessing Officer noted that no dividend has been earned by the assessee from the said company whose shares have been purchased. It was explained that company started this business activity during this year only and suffered losses and hence, no dividend was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further reliance was placed on the latest decision of Bombay High Court in the case of CIT v. Srishti Securities (P.) Ltd. [2010] 321 ITR 498 and also on the decision of Hon'ble Supreme Court in the case of Vodafone International Holdings B.V. v. Union of India [2012] 341 ITR 1 relevant page 13 of Supreme Court. It was also submitted that dividend income was taxable during the year under consideration. Therefore, any interest explained was allowable under section 57 (iii) of the Act. 6. On the other hand, learned D.R. firstly supported the Order of the CIT(A). It was further submitted that the decision of the Hon'ble Bombay High Court (supra) is distinguishable on facts as in this case the impugned investment in shares was not fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. Lokhandwala Construction Inds. Ltd. [2003] 260 ITR 579and the decision of India Cements Ltd. v. CIT [1966] 60 ITR 52 (SC). Learned D.R. has stated that these decisions are not applicable on the facts of the present case. In our view, the decisions are very much applicable as the loan was taken for acquiring the controlling interest in the company. In the present case also, loan was taken for acquiring shares of the company and after acquiring shares of the company, assessee got controlling interest of the company. No doubt in earlier decision the Hon'ble Bombay High Court has held that interest is not allowable if the loan is taken for acquiring controlling interest. When two possible views are there, then, the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Meaning thereby, the Hon'ble Supreme Court has held that controlling interest cannot be said to be that any income offered explained is allowable or not allowable if they are not provided specifically on the statute. The ratio of this decision can be easily imported on the facts of the present case as acquiring of controlling interest in the company does not bear any income or expenditure is to be assessed or not to be allowed. The interest has paid on borrowed funds for acquiring the shares of a company and the dividend income is taxable during the year under consideration. Therefore, in our considered view, the interest income is allowable as deduction under section 57(iii) or under section 36(1) (iii) of the Act. We, Order accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
