TaxTMI 
TaxTMI 
2013 (9) TMI 337
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....-house software for the taxpayer company. The taxpayer company advanced interest-free amount only for the reason that the taxpayer company would be benefited in terms of its own software development. According to the learned representative, the Assessing Officer disallowed proportionate interest to the extent of Rs. 1,61,313. Learned counsel for the taxpayer submitted that the partnership firm AG Info Solutions started its business for development of software. However, the firm could not pick up and finally it had to close down the business. According to the learned representative there was a commercial expediency in advancing funds to the sister-concern. On the contrary, Shri M. Anil Kumar, the learned Departmental representative submitted that the partnership firm AG Info Solutions is also occupying the premises of the taxpayer's building as a tenant. The partnership firm started its computer business. However, it could not pick up the business. Subsequently it was closed down. Since the business of the partnership firm was closed down, according to the learned Departmental representative there was no commercial expediency. According to the learned Departmental representative,....
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....inessman can be compelled to maximise his profit. The income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. We wish to make it clear that it is not our opinion that in every case interest on borrowed loan has to be allowed if the assessee advances it to a sister concern. It all depends on the facts and circumstances of the respective case. For instance, if the directors of the sister concern utilise the amount advanced to it by the assessee for their personal benefit, obviously it cannot be said that such money was advanced as a measure of commercial expediency. However, money can be said to be advanced to a sister-concern for commercial expediency in many other circumstances (which need not be enumerated here). However, where it is obvious that a holding company has a deep interest in its subs....
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....eration is disallowance of depreciation in respect of business premises known as "DD Milestone". Shri Arun Raj S, learned counsel for the taxpayer submitted that out of total area of 3,728 sq.ft., 2,928 sq.ft. was used for business purpose and a small portion of 800 sq.ft. was let out and the taxpayer was receiving rental income. The lower authority disallowed the claim of the taxpayer on the ground that the property was let out. The fact remains is that only a small portion of the building was let out and the other major portion was used for the business of the taxpayer. According to learned counsel, if at all any disallowance is called for, then only the proportionate depreciation pertaining to the let out portion can only be disallowed and not the entire claim of depreciation. On the contrary, Shri M. Anil Kumar, the learned Departmental representative submitted that admittedly, the property was let out to earn rental income. As per section 24 of the Income-tax Act, when a property is let out, the taxpayer is not entitled for depreciation. The depreciation cannot be allowed as a deduction while computing the rental income. On a query from the Bench, whether the entire buil....
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.... building has already been remitted back to the file of the Assessing Officer. In respect of the other two flats in Link Horizon, Marine Drive, Ernakulam and in Uni-Housing at Ernakulam the claim of the taxpayer is that the flats were given to the directors for the purpose of the taxpayer's business. Therefore, it has to be examined whether the flats were in fact given to the directors for the business purpose of the taxpayer or not. For the sake of consistency, this Tribunal is of the considered opinion that this issue also needs to be re-examined by the Assessing Officer. Accordingly, the orders of the lower authorities on this issue are set aside and the issue is remitted back to the file of the Assessing Officer for re-consideration. The Assessing Officer shall re-examine the issue afresh and find out whether the flats in question were used by the directors for the business needs of the taxpayer and thereafter will decide the issue in accordance with law after giving opportunity of hearing to the taxpayer. Now coming to the Departmental appeal, the only issue arises for consideration is exemption under section 10A of the Act. Shri. M Anil Kumar, the learned Departmental r....
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....(1A) of the Act. We find that the Special Bench of this Tribunal at Kolkata in the case of Madhu Jayanti International Ltd. v. Deputy CIT [2012] 18 ITR (Trib) 1 (Kol) I. T. A. No. 1463/Kol/2007 order dated July 20, 2012 examined this issue elaborately and after considering the judgment of the apex court in the case of Tara Agencies [2007] 292 ITR 444 (SC) ; the judgment of the Kerala High Court in the case of Girnar Industries [2011] 338 ITR 277 (Ker) and Tata Tea Ltd. v. Asst. CIT [2011] 338 ITR 285 (Ker) found that blending and packing of tea amounts to "manufacture", therefore, the taxpayer is eligible for deduction under section 10A of the Act. We have also carefully gone through the judgment of the Kerala High Court in the case of Tata Tea Ltd. [2011] 338 ITR 285 (Ker). The Kerala High Court, after considering its earlier judgment in Girnar Industries [2011] 338 ITR 277 (Ker) and the judgment of the apex court in Tara Agencies [2007] 292 ITR 444 (SC) found that the judgment of the apex court in the case of Tara Agencies [2007] 292 ITR 444 (SC) is not applicable for the purpose of considering exemption for industries in the export processing zone, free trade zone, and to 100....