TaxTMI 
TaxTMI 
2012 (6) TMI 131
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....grounds raised by the assessee in these four appeals are as follows: 2. The learned CIT erred in holding that the order of the assessment made u/s 143(3) r.w.s. 153A of the Act on 31.12.2008 is in any way prejudicial to the interests of the Revenue. 3. The CIT erred in holding that the interest paid on borrowed funds for purchase of units of Andhra Pradesh Gas Power Corporation Ltd. (APGPCL) is not allowable as a deduction. The CIT ought to have seen the fact that purchase of units from APGPCL is for the purposes of business. 4. The CIT ought to have considered the fact that by purchasing the said units, the assessee could get power at concessional rate and the concession derived by the assessee herein is substantial....
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....0 60,00,000 2002-03 10,00,00,000 1,20,00,000 2003-04 8,00,00,000 96,00,000 2004-05 5,75,00,000 69,00,000 3.1. From the above, it is seen that the assessee company has claimed expenditure towards interest paid/payable to ICICI Bank on the loan taken utilised for the purpose of investment in shares in APGPCL. Subsequently, these shares were sold and the resultant capital gains were claimed as exempt u/s 10(23G) of the Act. As such, the interest paid for the above assessment years which was incurred against the exempt income is to be disallowed u/s 14A of the Act. 3.2. The provisions of section 14A of the Act specify that any expenditure incurred in relation to income which does not form part of total income, was to be disal....
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....- each of APGPCL held by the company and also secured by personal guarantee of Learned departmental representative.J. Rameswar Rao, Chairman and MD and also by Corporate Guarantee on M/s My Home Constructions limited and collateral security on commercial property worth of Rs.126 lakhs belonging to M/s Ranjit Constructions. ii) Further, when the shares are sold out, the assessee has computed capital gain transfer of the shares when it has claimed exempt u/s 10(23G). Thus, from the books of account, it is apparent that the assessee has made investment in shares of APGPCL. The return on such investment being dividend is exempt. Again when there is capital on transfer of shares, the same is also exempt u/s 10(23G). Thus, as per provisio....
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....ied on the judgement of the Supreme Court in the case of S A Builders Ltd. vs. CIT (288 ITR 1) (SC) wherein it is held that once it established that there was nexus between the expenditure and the purpose of the business, the Revenue cannot justifiably claim to put itself in the armchair of the business man or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No business man can be compelled to maximise his profit. What is relevant is whether the amount was advanced as a measure of commercial expediency and not from the point of view of whether the amount was advanced for earning profit. We also gone through the judgement relied by the A....
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....he purpose of supply of power. The APGPCL was formed by Transmission Corporation of Andhra Pradesh on 31.10.1998 and business commencement certificate was issued on 2.12.1998. The main purpose of formation of this company is to generate power for consumption by its shareholders called as the "participating companies". The capital is contributed by participating industries in the ratio of the power supplied by APGPCL for consumption of participating industries. The power generated by the APGPCL is not for sale and it is formed for the mutual benefit of the shareholders and not for gaining any profit. For the purpose of distribution of power generated by this company and for the purpose of recovery of the cost of power generated the company e....