1996 (4) TMI 6

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....olding that the interest attributable to the loans borrowed by the assessee-firm for the purpose of construction of Safire theatre should be allowed under the head 'Business' especially when the theatre complex was sold as a going concern on July 31, 1965, and the business of exhibition of cinematographic films stopped on and from July 31, 1965 ? 2. Whether the conclusion of the Appellate Tribunal that the business carried on by the assessee as jewellers and in the running of the cinema theatre, restaurant, etc., are composite is based on valid materials and is a reasonable view to take on the facts and in the circumstances of the case ? " The assessment years with which we are concerned are the assessment years 1967-68, 1968-69 and 1....

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.... admittedly paid the interest in question for the years under appeal in respect of the loans which had been obtained for the purpose of investing in the business of exhibition of films. The Appellate Assistant Commissioner had found that it was not disputed that the moneys were borrowed for the purposes of the business of exhibition of films and for the construction of the said theatre, the income from which had been assessed in the earlier years. It was thus clear that at the time when the borrowings were made they were made for business purposes. The Revenue, the Tribunal noted, did not and could not challenge the correctness of this. The Tribunal also found that there was force in the submission on behalf of the assessee that the busines....

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....e the assessee had ceased to carry on that business for which the amount was borrowed, the interest payments could not be deducted as a business expenditure as, admittedly, the business had stopped and no income accrued therefrom. The High Court relied upon the judgments that related to the benefit of carry forward losses and carry forward depreciation. Learned counsel for the assessee drew our attention to the judgment of this court in B. R. Ltd. v. V. P. Gupta, CIT [1978] 113 ITR 647. This court affirmed what had been held earlier in Produce Exchange Corporation Ltd. v. CIT [1970] 77 ITR 739. Both these related to the meaning to be ascribed to the expression "same business" for the purposes of setoff of carry forward loss. In the forme....