9911796707
TMI Blog2024 (3) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment year 2014-15. 2. The background facts of the case are that the assessee-company, in the business of hospitality and agriculture, returned an income (loss) of Rs. (-) 178.97 lakhs for the relevant year, incurring a total expenditure of Rs. 410.61 lakh; the difference representing interest income on investment bearing coupon rate of 12% per annum. As no business had commenced; the company being engaged in acquiring agricultural land and hospitality ventures in different parts of the country, the entire expenditure was by way of pre-operative expenditure. The same was till the current year, as stated, being financed by share capital and unsecured loans from the Directors. During the current year, the company mobilized public borr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment as having been financed by secured debt, only which would entitle the assessee it's claim of deduction of interest expenditure w.r.t. the entire interest income. Reliance on Tuticorin Alkali Chemicals & Fertilizers Ltd. (supra) was reiterated. 4. We have heard the parties, and perused the material on record. 4.1 Though the assessee, we observe, in it's pleadings before the AO, stated of capitalization of the impugned interest income, or of setting it off against preoperative expenditure, as in fact it does in returning a loss of Rs. 178.97 lakh, before us, and toward which we have also seen it's grounds of appeal (GoA), it's only claim was for being allowed proportionate interest expenditure against interest income inasmuch as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under which the interest income is liable to be assessed and, two, the extent thereof. The same is admittedly u/s.56, upon allowing deduction of interest incurred, claimed at 11% p.a., u/s.57(iii). Only real income, subject no doubt to the provisions of the Act, is liable to be taxed. The matter is well settled (see, inter alia, Poona Electric Supply Co. Ltd. v. CIT [1965] 57 ITR 521 (SC); Southern Technologies Ltd. v. Jt. CIT [2010] 320 ITR 577 (SC); CWT v. Bombay Suburban Electric Supply Ltd. [1976] 103 ITR 384 (Bom)). The reliance by the Revenue on the decision in Tuticorin Alkali Chemicals (supra) is opposite. So, however, in the facts of the case, as noted by it (pg. 180 E of the Reports), there was no claim by the assessee in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was there therefore any occasion for the Revenue to respond thereon. The issue of matching period, in view of the strict language of s.57(iii), as against s.36(1)(iii), applicable in that case, would in any case distinguish the said decision, which we observe as rendered de hors the proviso thereto. 4.3 No claim, apart from the foregoing, i.e., proportionate interest on borrowed capital invested in PDI, since allowed by us at Rs. 212,31,808, we clarify, was made before us. That is, no case qua capitalization of interest stands made before us even as the assessee per it's written submissions refers to AS-16, i.e., the Accounting Standard on Borrowings, with their further being nothing to suggest construction and, rather, the assessee acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
