9911796707
TMI Blog1998 (4) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... company also agreed to supply technical know-how in the manufacture of sweets and confectionery to the Malaysian company. The assessee-company raised equity capital of Rs. 5,00,000 in foreign exchange from an Indian Bank situate at Kuala Lumpur, viz., United Commercial Bank. However, the assessee-company was required by the Government of India to repay the loan raised from the United Commercial Bank from the earnings out of the Malaysian company. If the assessee-company is unable to repay the loan out of its foreign earnings to the Commercial Bank within five years and if the assessee-company is forced to remit repayment from India after five years, then the assessee-company should pay a penalty, which is equal to such repayment to the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee's business, and the expenditure was also capital in nature. The Income-tax Officer also disallowed the claims relatable to (1) preliminary expenses ; (2) difference in exchange rates ; (3) amount payable to the United India Fire and General Insurance Company ; and (4) royalty written off, holding that those items of expenditure do not relate to the business of the assessee-company but relate to the business of the Malaysian company. On appeal, the Commissioner of Income-tax (Appeals) concurred with the decision of the Income-tax Officer. According to him, the penalty arose on account of loan transaction, which was on capital account and, therefore, the penalty was capital, but, not revenue in nature. The assessee also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the expenditure incurred is not allowable as business expenditure or as a business loss ? (3) Whether the Tribunal was right in not considering the issue relating to preliminary expenses incurred by the applicant-company, which was incidental to carrying on of the assessee's business of promoting and managing other companies ? (4) Whether the applicant's claim for exchange of loss of Rs. 3,68,167 in respect of remittance to Malaysia was not an allowable deduction ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the loss sustained by the assessee on account of standing guarantee to the Malaysian company should not be allowed ? (6) Whether, on the facts and in the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, about which there is no dispute, is that the assessee-company got permission from the Government of India and from the Reserve Bank of India to participate in the equity capital of a Malaysian company to the tune of Rs. 5,00,000. One more fact of some signal importance to be taken note of is that the assessee-company also agreed to supply technical know-how in the manufacture of sweets and confectionery to the Malaysian company and for the supply of technical know-how the assessee-company agreed to receive a certain amount of royalty from the Malaysian company. The cumulative effect of all these factors would make it appear in a crystal clear fashion that the assessee-company and the Malaysian company are two different and distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
