TaxTMI 
TaxTMI 
2007 (9) TMI 450
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.... on account of Rent for Guest House. 2. The CIT(A) erred in confirming the disallowance of Rs. 27,386 under section 37(2A) as entertainment expenses. 3. The CIT(A) erred in confirming the disallowance of depreciation of Rs. 3,11,377 on residential premises at Bakhtawar on the ground that the flat is not being utilised for its business. 4. The CIT(A) erred in confirming the addition of Rs. 2,00,000 as lease rentals for the assessment year 1989-90 on certain machinery whose installation had been disputed in the assessment year 1989-90 and for which full year's lease rentals had been accounted and offered for tax during the year under reference. 5. The CIT(A) erred in confirming the disallowance of Stamp Duty on issue of Rights shares amounting to Rs. 1,49,400 by considering the same as capital in nature." 4. The learned counsel appearing on behalf of the assessee was fair enough in pointing out that the issue raised in Ground No. 1 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 . Accordingly, this ground of the assessee is dismissed. 5. Ground No.....
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....sessee's case for assessment year 1989-90 as a consequence of directions of the Tribunal given therein which was pending before the Assessing Officer. 8. The learned D.R. also agreed. 9. On due consideration of facts and circumstances, we restore this issue to the file of Assessing Officer to decide the same in accordance with the conclusions arrived at in assessment year 1989-90 by the Tribunal. Thus, this ground of the assessee stands allowed for statistical purposes. 10. With regard to the issue raised in ground No. 5, the ld. Counsel fairly accepted that 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 of the assessee is also dismissed. 11. In the result, assessee's appeal in ITA No. 1371/Mum./05 for assessment year 1990-91 stands partly allowed for statistical purposes. 12. Now, we shall take up revenue's appeal in ITA No. 642/Mum./05 for assessment year 1990-91, wherein the revenue has raised the following ground:- "On the facts and in the circumstances of the case as well as in law, the learned CIT(A) has erred in direct....
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....e ground that the flat is not being utilised for its business." 18. With regard to ground No. 1, the learned counsel appearing on behalf of the assessee was fair enough in pointing out that the issue raised in Ground No. 1 was covered against the assessee by the decision of the Hon'ble Supreme Court in the case of Britania Industries Ltd. (supra). Accordingly, this ground of the assessee is dismissed. 19. Ground No. 2 was not pressed, hence, the same is dismissed as not pressed. 20. With regard to the issue raised in ground No. 3, the ld. Counsel fairly accepted that 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. (supra). Accordingly, this ground of the assessee is dismissed. 21. Ground No. 4 is identical to ground No. 3 of assessee's appeal in ITA No. 1371/Mum./05 for assessment year 1990-91, hence, the same is also dismissed on similar lines. 22. In the result, assessee's appeal in ITA No. 1372/Mum./05 for assessment year 1991-92 stands dismissed. 23. Now, we shall take up assessee's appeal in ITA No. 1373/Mum./05 for assessment year 1992-93, wherein the assessee has raised the fol....
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....on under section 80M was claimed by the assessee company without appreciating the fact that assessee company failed to prove the nexus of amount paid and the funds available with the company at relevant time for investment. 2. On the facts and in the circumstances of the case as well as in law, the learned CIT(A) has erred in directing the Assessing Officer to allow deduction under section 80M of the Income-tax Act on the whole of intercorporate dividend without deducting interest expenses of Rs. 61,99,000 and other expenses of Rs. 1,68,052 incurred for earning dividend income in spite of the fact that assessee failed to discharge the onus of correlating the sources of investment from asset from which dividend income was earned." 31. Brief facts, relating to ground No. 1, are that the assessee claimed interest expenses at Rs. 1091.29 lakhs. The Assessing Officer required the assessee to explain the borrowed funds which were utilised for investment in shares/units/debentures/bonds. The assessee submitted a fund flow statement for accounting year beginning from 1-1-1985 and pointed out that in each of these years, incremental funds of the assessee exceeded the investments....
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....wed funds. 33. The learned counsel for the assessee, on the other hand, contended that Assessing Officer's order was based upon presumption of utilization of borrowed funds for making investment in shares/debentures etc. whereas the fact was that at every point of time, the assessee was having net owned funds in excess of investments made. The ld. Counsel also submitted details of incremental cash flow which included internal accruals and contended that even these incremental cash flows were higher than the amount of investment made in that specific year. The ld. Counsel further contended that in a case of mixed funds where net owned funds were far more in excess of investments made in securities/investments yielding securities then, the presumption was in favour of assessee implying that such investments were made out of net own funds. For this proposition, the ld. Counsel relied on the following decisions:- 1.Hotel Savera's case (supra) 2.CIT v. South India Corporation (Agencies) Ltd. [2007] 209 CTR (Mad.) 233 3.Shree Digvijay Cement Co. Ltd.'s case (supra ) 4.CIT v. Tin Box Co. [2003] 260 ITR 637 ^ (Delhi) 5.CIT v. Radico Khai....
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....e established. In this background, now we have to look into the legal aspects of the issue. It is a settled proposition that for claiming the expenditure, onus lies on the assessee to prove that such expenditure has been incurred for the purposes of the business and this position is applicable both for claims made under sections 36(1)(iii) & 37(1) of the Act. We are also of the view that there can neither be a presumption in favour of the assessee nor in favour of the revenue and appropriate decision has to be taken on the facts of each case and in the present case, no doubt, the assessee's funds are mixed but by submitting the fund flow statements and incremental cash flow statements for each year which show that incremental cash flows including internal accruals were more than the amount invested by the assessee, the assessee in our opinion, has discharged its onus of proving that the investments were made out of net own funds available with the assessee. Further, from the perusal of the Balance Sheet as on 31-3-1992, it is observed that there is an increase in the share capital as well as reserve and surplus as compared to previous year to the tune of Rs. 6.92 crores and 2.67 cr....