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TMI Blog2017 (8) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... negatived by the Apex Court in Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME Court ). In fact, the only requirement is that the expenditure is with the object of earning income and not dependent upon actual earning of income in fact. In this case, the impugned Order of the Tribunal has recorded a finding that the amount of 3.25 Crores were paid to Mr.G.R.Handa by the Respondent/Assessee only with a view to safeguard its investment in M/s.A.P.Rayons Ltd. so as to earn dividend/interest income. The decision of Gujarat High Court in Sarabhai Sons (P) Ltd. (1993 (1) TMI 53 - GUJARAT High Court ) relied upon by the Revenue would have no application to the present facts. Thus, on the present facts, no interference with the impugned Order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.G.R.Hada, u/s.57(iii) of the I.T. Act when such payment was made for enlarging the control and management over M/s.Andhra Pradesh Rayon Ltd. ?" 3. The respondent/assessee along with M/s.Andhra Pradesh Industrial Development Corporation (APIDC) and Mr.G.R.Hada had jointly promoted M/s.Andhra Pradesh Rayons Ltd. (A.P. Rayons Ltd.). The shareholding in M/s. A.P. Rayons Ltd. was distributed amongst the promoters in terms of Memorandum of Understanding dt.31.10.1977 (M.O.U.) as under : Public : 49 % APIDC : 10 % Mr.G.R. Handa & its Associates : 10.25 % Respondent/Assessee & its Associates : 30.75 % 4. The M.O.U. further provided a right to Mr.G.R.Handa to acquire from Respondent/Assessee 1/3rd of its total shareholding in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction as claimed of ₹ 3.25 Crores is a revenue expenditure inasmuch as he held that the same would be allowable u/s.57 of the Act provided the income by way of interest/dividend was earned on the expenditure incurred during the subject Assessment Year. However, on facts, the CIT (A) found that there was no income/interest earned during the subject Assessment Year. Therefore, the benefit of deduction u/s.57(iii) of the Act could not be extended to the Respondent/Assessee. 8. Being aggrieved with the Order dated 18.12.1998 of the CIT (A), the Respondent/Assessee filed an appeal to the Tribunal. Amongst others, the respondent/assessee urged the following grounds : "4c) Without prejudice to the above the learned CIT (A) was wrong in to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant/revenue in support of the appeal submits that the impugned order could not allow the Respondent/Assessee's appeal as the amount of ₹ 3.25 Crores paid to Mr.G.R.Hada was in the nature of capital expenditure so as to acquire control of M/s.A.P.Rayons Ltd. In support, reliance is placed upon the decision of Gujarat High Court in Sarabhai Sons (P) Ltd. vs. Commissioner of Income Tax, (1993) 201 ITR 0464. According to the Revenue, the decision of the Apex Court in Rajendra Prasad Moody (supra) would have no application to the present facts. 11. In response, Mr.Dewani, learned Counsel for the respondent/assessee points out that there was no question of acquiring any control over M/s.A.P. Rayons Ltd. as the shareholding of responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of income in fact. In this case, the impugned Order of the Tribunal has recorded a finding that the amount of ₹ 3.25 Crores were paid to Mr.G.R.Handa by the Respondent/Assessee only with a view to safeguard its investment in M/s.A.P.Rayons Ltd. so as to earn dividend/interest income. 13. The decision of Gujarat High Court in Sarabhai Sons (P) Ltd. (supra) relied upon by the Revenue would have no application to the present facts, as it found on facts in the above case that the shares were acquired from other shareholders so as to have 100% control over Swastic Oil Mills Ltd. and not for earning income. This was so as the High Court records the fact that as the Assessee therein was not able to acquire 100 % shareholding in Swastic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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