Tribunal Partly Allows Assessee's Appeal on Interest and Section 80M; Lease and Investment Issues Remanded for Review.

The Tribunal dismissed several grounds against the assessee, including disallowances under sections 37(4) and 37(2A), and depreciation on residential premises. Issues related to lease rentals and investment allowance were remanded to the Assessing Officer for further consideration. Disallowances of stamp duty and share issue expenses were upheld based on precedent. The Tribunal accepted the assessee's arguments regarding interest expenditure and deduction under section 80M. The assessee's appeal for AY 1990-91 was partly allowed for statistical purposes, while appeals for AY 1991-92 and AY 1992-93 were dismissed. The revenue's appeal for AY 1990-91 was allowed for statistical purposes, and for AY 1992-93, it was dismissed.

---

---

Issues Involved:
1. Disallowance under section 37(4) on account of Rent for Guest House.
2. Disallowance under section 37(2A) as entertainment expenses.
3. Disallowance of depreciation on residential premises.
4. Addition of lease rentals for machinery.
5. Disallowance of Stamp Duty on issue of Rights shares.
6. Investment allowance on certain assets.
7. Disallowance of reimbursement expenses on public issue.
8. Disallowance of share issue expenses.
9. Disallowance of interest expenditure on funds utilized for making investments.
10. Deduction under section 80M for intercorporate dividends.

Detailed Analysis:

1. Disallowance under section 37(4) on account of Rent for Guest House:
The issue raised in Ground No. 1 was dismissed as it was covered against the assessee by the decision of the Hon'ble Supreme Court in the case of Britania Industries Ltd. v. CIT [2005] 278 ITR 546.

2. Disallowance under section 37(2A) as entertainment expenses:
Ground No. 2 was not pressed by the assessee and hence dismissed as not pressed.

3. Disallowance of depreciation on residential premises:
The Tribunal upheld the CIT(A)'s decision to disallow depreciation on the residential premises, as the asset was not actually used for business purposes. This was consistent with the Tribunal's decision in the assessee's own case for the assessment year 1989-90.

4. Addition of lease rentals for machinery:
The Tribunal restored this issue to the file of the Assessing Officer to decide in accordance with the conclusions arrived at in the assessment year 1989-90, as the matter was pending before the Assessing Officer.

5. Disallowance of Stamp Duty on issue of Rights shares:
This issue was also covered against the assessee by the decision of the Hon'ble Apex Court in the case of Brooke Bond India Ltd. v. CIT [1997] 225 ITR 798. Accordingly, this ground was dismissed.

6. Investment allowance on certain assets:
The Tribunal restored the issue to the file of the Assessing Officer to be decided in accordance with the directions of the Tribunal in respect of Ground No. 4 of assessee's appeal in ITA No. 1371/Mum./05.

7. Disallowance of reimbursement expenses on public issue:
Ground No. 2 in ITA No. 1372/Mum./05 was not pressed by the assessee and hence dismissed as not pressed.

8. Disallowance of share issue expenses:
This issue was covered against the assessee by the decision of the Hon'ble Apex Court in the case of Brooke Bond India Ltd. (supra). Accordingly, this ground was dismissed.

9. Disallowance of interest expenditure on funds utilized for making investments:
The Tribunal held that the assessee had discharged its onus of proving that the investments were made out of net own funds available with the assessee. The Tribunal found no justification for making proportionate disallowance and accepted the assessee's ground.

10. Deduction under section 80M for intercorporate dividends:
The Tribunal held that only actual expenditure incurred for earning dividend income should be considered for deduction under section 80M. The issue was covered in favor of the assessee by the decision of the Special Bench of the Tribunal in the case of Punjab State Industrial Development Corpn. Ltd. Accordingly, this ground was accepted.

Summary of Judgments:
1. Assessee's Appeal in ITA No. 1371/Mum./05 for AY 1990-91: Partly allowed for statistical purposes.
2. Revenue's Appeal in ITA No. 642/Mum./05 for AY 1990-91: Allowed for statistical purposes.
3. Assessee's Appeal in ITA No. 1372/Mum./05 for AY 1991-92: Dismissed.
4. Assessee's Appeal in ITA No. 1373/Mum./05 for AY 1992-93: Dismissed.
5. Revenue's Appeal in ITA No. 643/Mum./05 for AY 1992-93: Dismissed.

---