TaxTMI 
TaxTMI 
2017 (8) TMI 121
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....her on the facts and in totality of circumstances, the fixed deposits having been made which were charged in favour of the secured creditor, the State Bank of India and the fixed deposits were also with the State Bank of India, the learned Tribunal was right in law in not netting the interest receipts against interest expenditure and in not setting off the same but taxing the gross receipts of Rs. 59,31,141 ? Whether the directions contained in para 52 to adjust the amount of unabsorbed depreciation of earlier ten years against such profit or short term capital gain on sale of such assets and then find out the remainder, if any, and allow such remainder during the assessment year 1993-94 are not without jurisdiction and invalid in ....
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....ound that the Commissioner of Income-tax ordered set off of the interest gained against the interest payable was not permissible. The Tribunal, however, allowed the claim of setting off of the unabsorbed depreciation as against the interest income. 5. Counsel for the appellant has contended that in view of Rule 179 of the Company's Court Rules, 1959 and section 57 of the Income-tax Act, 1961 and also rules 293, 296, 297 and rule 470 of the Rules, the view taken by the Tribunal is contrary to the decision of the Supreme Court in Vijaya Laxmi Sugar Mills Ltd. v. CIT reported in [1991] 191 ITR 641 (SC) wherein in para no.10, it has been held as under (page 646) : "The next submission of the learned counsel for the assessee was ....
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....ver we may hasten to add that if any expenditure was incurred like commission for collection or such similar expenditures which may be considered as spent solely for the purpose of earning that income, the position may be different. But that was not so in this case. It could not also be said that the expenditure incurred was to preserve or acquire the asset. Nor could it be said that the expenses were incurred for the purpose of maintenance of the source. The requirement under section 57(iii) that the expenditure should have been incurred 'for the purpose of making or earning such income' shows that the object of spending or the end or aim or the intention of such spending was for earning the interest income. There could be no doubt....
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....vent, the company in liquidation was merely a trustee for the share holders to whom the fixed deposit receipts had been transferred and the interest income would be assessable only as income of the beneficiaries and not as that of the trustee." 6. Mr. Mathur has taken us to the order of the Assessing Officer and contended that in view of the findings of the Assessing Officer, the depreciation which was not carried forward cannot be considered as a business expenditure as the unit was closed, and hence deduction thereof cannot be allowed from the interest income as provided under section 57(iii) of the Act of 1961. 7. In light of the above submissions, issue No. 2 is not pressed by the counsel for the appellant. 8. In view of the ab....
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....terest of Rs. 84,654 from the interest amount of Rs. 2,31,247 receivable by it on the fixed deposit. The Assessing Officer did not allow the claim, but added the entire interest received on the fixed deposit as income from other sources. On appeal by the assessee, the Commissioner of Income-tax (Appeals) held that it would not be appropriate to ignore the asses see's claim for deduction of Rs. 84,654 since the interest was taken away by the bank as consideration for the facilities extended by it to the assessee. On further appeal by the Revenue, the Income-tax Appellate Tribunal held that the interest at the rate of 2 per cent. in excess of the interest payable on the fixed deposit by the bank was paid by the assessee on the borrowals m....