9911796707
TMI Blog2007 (1) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income on 26-11-1996 declaring an income of Rs. 1,57,265. It is engaged in the business of shares and security broker under National Stock Exchange. On scrutiny of the account it revealed to the Assessing Officer that assessee has debited a sum of Rs. 3,79,974 in the P&L Account as interest paid. Out of this amount a sum of Rs. 3,58,963 is relating to the interest paid to National Stock Exchange on delayed payment of capital market last instalment of Rs. 25 lakhs. The Assessing Officer issued show-cause notice to the assessee inviting its explanation as to why this interest should not be disallowed. In response to the query of Assessing Officer the assessee submitted the explanation vide letter dated 20-3-1999, which reads as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the ld. CIT(A) did not bring any relief to the assessee. 4. The ld. counsel for the assessee while impugning the orders of revenue authorities below pointed out that assessee got registration with the National Stock Exchange on 15-12-1994. It has started its business in the month of April 1995 itself. Though interest is paid on the security deposit for capital market but it was paid after commencement of business and it deserves to be allowed as business expenses. In support of his contention he relied upon the decision of Hon'ble Supreme Court rendered in the case of Veecumsees v. CIT [1996] 220 ITR 185 and of Hon'ble Bombay High Court rendered in the case of Calico Dyeing & Printing Works v. CIT [1958] 34 ITR 265. On the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atre. The said theatre was built in 1962 and was run by the assessee until 31-7-1965, when it was transferred to another firm. For the years during which the assessee exhibited films in the said theatre the interest paid on the loans obtained for constructing it were allowed by the revenue as a deduction under the provisions of section 36(1)(iii) of the Income-tax Act, that is to say, as being the amount of interest paid in respect of capital borrowed for the purpose of the assessee's business. For the years in question, however, the Income-tax Officer declined that deduction on the ground that the business of exhibition of films in the said theatre was no longer in existence; therefore, the interest on borrowings attributable to this parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the exhibition of films till 31-7-1965, and that only thereafter was the activity of exhibition of films discontinued. The liability to pay interest had arisen in respect of the business carried on by the assessee till 31-7-1965. Thus, the facts before Hon'ble Supreme Court are quite distinguishable with the facts of the present case. Similarly the assessee cannot draw any benefit from the decision of Hon'ble Bombay High Court rendered in. the case of Calico Dyeing & Printing Works. In that case also the assessee is running a concern and it has borrowed capital for purchasing new machinery. But in the present case the interest expenses incurred by the assessee are to be seen on the date when it was supposed to make deposit with the Nation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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