TaxTMI 
TaxTMI 
2002 (10) TMI 56
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....ted Soviet Russia. The agreement was in writing and the basic terms of the agreement were, that a company would be floated by the two parties, and capital would be contributed by the assessee to the extent of 60 per cent. and the Russian party to the extent of 40 per cent. The proposed share capital which the parties had envisaged in the beginning was about Rs. 5.27 crores. However, soon thereafter they reduced their target to about Rs. 3.68 crores. Between March 31, 1990, and December 21, 1990, the assessee-firm contributed to the joint venture company, viz., Tropical Fruits International Ltd., sums of the aggregate amount of Rs. 2.21 crores approximately. After having obtained due permission from the Reserve Bank of India a....
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....of Rs. 4 crores, and thereafter the rest was asked for. The records before us also show that as and when money went back from the unconverted application money to Russia (i.e., part of the 40 per cent.) the assessee-firm also took back the corresponding 60 per cent. from its contributed application money. If anything, the assessee took back its part 60 per cent. even before the part 40 per cent. was sent over to Russia. In these circumstances, a point arose in the assessee's tax returns, as to whether the funds which the assessee had borrowed, for the purpose of advancing to the joint venture, and which borrowed funds were attracting interest, would come within the scope of the assessee being entitled to claim a deduction for interest....
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....of admission of the appeal we were deeply surprised to note that the Tribunal had opined that nothing had been brought on record by the assessee to show and explain why Tropical Fruits International Ltd. had not paid any interest on the application money and yet why the assessee had itself paid interest on borrowed funds which it had advanced by way of application money. There were numerous papers before the Tribunal. It was the duty of the Tribunal to consider the case of the assessee being compelled to keep its application money blocked, because its associate was being so compelled to keep its money blocked without conversion into share capital because of the State's internal problems. Finding the Tribunal's order wholly lacking in exp....
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....lauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28--... (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession." In case it appears that in the above facts and circumstances of the case the monies lying with Tropical Fruits, belonging to the assessee, intended to be, but yet unconverted into share capital had been borrowed by the assessee for the purposes of the assessee's business, then and in that event it would be the bounden duty of the Tribunal to permit deductions. We have formulated the above question on the supposition that if the facts and circumstances as enumerated above are considered, and th....
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....hat the facts and circumstances of this case disclose a state of affairs where only one conclusion was possible to be drawn by any reasonable authority. The assessee lost before the Assessing Officer, won before the Commissioner of Income-tax (Appeals) and lost again before the Tribunal, which failed to take note of any of the material facts. When an authority draws a conclusion which cannot be drawn by any reasonable person or authority on the disclosed state of facts, then a perverse decision is entered and a perverse decision is wrong in law. It is in this way that we have felt compelled to interfere under section 260A. In an old English case of Edwards (H. M. Inspector of Taxes) v. Bairstow and Harrison the House of Lords de....