TaxTMI 
TaxTMI 
2009 (1) TMI 408
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....articles of association of the assessee show their main object as under: "To purchase, acquire, hold, sell, invest, dispose and otherwise deal in shares, stocks, debentures, stock, Government securities, bonds, units of any company or other authority supreme municipality or local." 3. The assessee held the funds which were utilized for acquiring shares by way of investment as well as by way of stock-in-trade. The value of the shares held as investment as on March 31, 1997 was Rs. 2,59,22,692 and the cost of shares held as stock-in-trade on the same day amounted to Rs. 18,56,250. The assessee had borrowed funds on which the assessee paid total interest of Rs. 14,37,255 for which deduction was claimed under section 57(iii) of the ....
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....that the capital which was borrowed was used for the business purpose in the relevant year of account and it does not matter whether the capital was borrowed or not to acquire revenue asset or capital asset. The learned Tribunal also relied on the judgment of the Calcutta High Court in the case of CIT v. Rajeeva Lochan Kanoria [1994] 208 ITR 616 where the Calcutta High Court took a view that under the provisions of section 36(1)(iii) of the Income-tax Act, the only enquiry to be made is whether the payment of interest was in respect of capital borrowed for the purpose of the assessee's business or profession. Such amount borrowed, if for the purpose of business or profession may be utilised for the purpose of acquisition of stock-in-tra....
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.... on March 31, 1994. However, in the subsequent balance-sheets on March 31, 1995 and March 31, 1996, the shares were shown as stock-in-trade. It was also contended that the shares had been sold during the subsequent assessment years. The Tribunal was of the opinion that the Revenue authority has not properly examined the issues and accordingly restored the same to the Assessing Officer with a direction that the assessee's claim that the investment was converted into stock-in-trade with reference to the entries made in the books of account of the relevant year in which the alleged conversion took place should be verified. Directions were also issued that the claim can be considered with reference to the provisions of section 45(2) of the ....
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....usiness of the assessee as held by the authority below? (d) Whether in the facts and circumstances of the case and in law, the Tribunal is right in restoring the issue of valuation of closing stock of the shares held by the respondent in LKP Merchant Financing Ltd. when the said shares were held as an investment and not as stock-in-trade?" 8. We may firstly consider the first three questions as to whether the interest of borrowed capital which was utilised in the business of purchase of shares both by way of investment and stock-in-trade is allowable deduction. 9. In so far as first three questions are concerned, in our opinion a co-ordinate Bench of this court in Lokhandwala [2003] 260 ITR 579 had addressed itself to this is....
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....the deduction claimed under section 5(e) of the Madras Plantations Agricultural Income-tax Act, 1955. While considering the issue the court was pleased to observe that in principle there is no distinction between interest paid on capital borrowed for the acquisition of a plantation and interest paid on capital borrowed for the purpose of an existing plantation. Both are for the purpose of the plantation. The court further observed that the payment of interest on the amount borrowed for the purpose of the plantations when the whole transaction of purchase and the working of the plantations was viewed as an integrated whole was so closely related to the plantations that the expenditure could be said to be laid out or expended wholly and exclu....