TaxTMI 
TaxTMI 
2013 (7) TMI 764
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....ted 09/11/2012 and 21/12/2012 respectively in Tax Appeal No. 502/2013 and Tax Appeal No. 503/2013 under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') raising the following identical substantial question of law in each, for determination of this Court; TAX APPEAL No. 503/2013 "Whether the Hon'ble Tribunal has justified in allowing interest expenses which was not become payable on the last day of Financial Year 2005-06 on unspent grant by the assessee under Section 37(1) of the Income Tax Act, 1961 amount to Rs.1,87,61,273/-?" TAX APPEAL No. 502/2013 "Whether the Hon'ble Tribunal has justified in allowing interest expenses which was not become payable on the last day of Financial year 2008-09 on u....
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....chnology. The Assessing Officer did not allow such deduction on the ground that the assessee was not under obligation to repay the amount granted and, therefore, it was not borrowed capital nor would the same fall under the definition of expenditure as defined under Section 37(1) of the Act. 4. When the matter was challenged before the CIT(A) it considered elaborately the Government Resolutions and considering the very issue held in favour of the assessee so far as Section 37 is concerned. The CIT(A) of course was of the belief that Section 36(1)(iii) was not applicable as there was no borrowing. It was further noted that the funds in question are part of the business, which has been utilized by the assessee, including parking by the M/s....
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....unt in question was not in the nature of borrowings or loans, therefore, the provisions of Section 36(1)(iii) do not apply on these facts. We are in agreement with learned CIT(A) that this pleas of the assessee is not acceptable. Once we have held so and that this view has already been expressed by the learned CIT(A), therefore the objection of the Revenue Department that the learned CIT(A) was not justified in allowing the expenditure under Section 36(1)(iii) is unwarranted. Because of this reason, we hereby also hold that the case laws cited by the ld.DR of Pepsu Road Transportation (Supra) do not apply on the present facts of this appeal because of the reason that the Hon'ble P&H High Court in that cited decision has settled the issue wh....
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.... 613 (Karn.). He emphasized that the amount of interest, which has been specified to be deductible is not actually expended by the assessee and Section 37 gives the benefit of the amount only under the circumstances when the amount is actually expended. He reiterated that the tribunal has erroneously granted the benefit to the respondent under Section 37 of the Act as what the respondent has done is only to make a provision for payment of interest in the future. 7. In view of the glaring facts, on having heard the learned advocate appearing on behalf of the appellant and considering the material on record with his assistance, we are of the firm opinion that the tribunal has committed no error, for the reasons to follow hereinafter. 8.....
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....head of profit and gains of business or profession. 9. The Karnataka High Court was dealing with the similar issue where the deduction was sought under Section 37 of the Income Tax Act. Such judgment is sought to be relied upon by the learned advocate appearing on behalf of the appellant rendered in the case of Micro Land Ltd. (Supra). The Karnataka High Court dealt with the provisions of warranty made by the assessee and it held that it was not permissible and further said that in order to be deductible under Section 37 of the Income Tax Act, 1961, expenditure must be actually incurred or laid out in the year under consideration and it should not be contingent expenditure. The Court also held that in the matter before it, the liability ....
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....rest amount, at the rate of 6%, to be paid to the department of the Science and Technology. The liability was necessarily ascertained for having come in a package, given to the assessee while disbursing the amount/grant as also by way of both Government Resolutions as discussed elaborately by both the CIT(A) and the tribunal and, therefore, by no stretch of imagination it can be said that there was uncertain or undetermined liability. The assesee-Company is a government undertaking incorporated for implementation of Information Technology (IT) policies in the State of Gujarat. It also provides its services to various department on commission basis for providing hardware and software. As the Government Resolutions as mentioned hereinabove sp....