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of <h1>High Court favors assessee on set-off, interest deduction, and trading addition issues.</h1> <h3>Commissioner Income Tax Versus M/s. Translam Ltd.</h3> Commissioner Income Tax Versus M/s. Translam Ltd. - TMI Issues:- Set off of brought forward losses and unabsorbed depreciation against business income- Deductibility of interest on borrowed capital for capital-work-in-progress- Deletion of trading addition made by the Assessing OfficerSet off of Brought Forward Losses and Unabsorbed Depreciation Against Business Income:The appeals were filed against the order of the Income Tax Appellate Tribunal regarding the set off of business losses and unabsorbed depreciation against the income of another unit. The High Court noted that unity of control and common management are crucial in determining if it is the same business for set off purposes. In this case, the temporary suspension of the edible oil unit did not change the nature of business income. The lease rent was already treated as business income, allowing for the set off of business losses against it. The High Court upheld the order of the appellate authorities based on various case laws supporting this interpretation.Deductibility of Interest on Borrowed Capital for Capital-Work-in-Progress:The dispute regarding the deduction of interest on borrowed capital for capital-work-in-progress was addressed. The Assessing Officer disallowed the deduction, but the appellate authorities allowed it under section 36(i)(iii) of the Income Tax Act. It was found that the borrowed funds were utilized for business expansion, making the interest paid allowable as a deduction. The nature of fund utilization did not impact the deduction eligibility, especially since no new unit was started during the assessment year. The High Court sustained the decisions of the appellate authorities in allowing the deduction.Deletion of Trading Addition Made by the Assessing Officer:The issue of the trading addition made by the Assessing Officer was discussed. The addition was based on a lower gross profit rate compared to previous years. However, it was clarified that the inclusion of excise duty in the sale price affected the gross profit rate calculation. After excluding the excise duty element, the gross profit rate for the year was actually higher. No defects in the books were identified by the Assessing Officer. Consequently, the High Court found no reason to interfere with the orders of the appellate authorities and upheld their decisions.In conclusion, the High Court ruled in favor of the assessee and against the Department on all three issues. The appeals filed by the Department were dismissed, and the orders of the appellate authorities were upheld. The judgment provided detailed reasoning and interpretations based on the facts and legal provisions involved in each issue.
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