TaxTMI 
TaxTMI 
2002 (8) TMI 88
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....rt: "1. Whether, on the facts and circumstances of the case, the rental income from the Bank of Baroda was taxable under the head 'Business income' or 'Income from other sources'? 2. Whether, on the facts and circumstances of the case, the interest difference on the extra amount of Rs. 2,50,000 could be allowed as a deduction?" We have heard Mr. B.B. Naik, learned standing counsel appearing on behalf of the applicant-Revenue, and Mr. R.K. Patel, advocate, appearing on behalf of the respondent-company. The facts, briefly stated, are that on July 1, 1978, the assessee-company entered into an agreement with L.M. Patel and B.M. Patel (HUF) whereunder a portion of the building known as "Suraj Plaza" was taken on lease at a monthly re....
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....ine per cent, was not allowable in the hands of the assessee-company as a deductible item of expenditure in relation to the additional amount of Rs. 2.50 lakhs advanced as loan to the Hindu undivided family. The assessee-company preferred an appeal before the Commissioner of Income-tax (Appeals), who, for the reasons stated in his order, held that the entire activity of obtaining partially constructed premises from the Hindu undivided family on lease and hiring out it to the Bank of Baroda constituted business activity of the assessee. It was further held by the Commissioner of Income-tax (Appeals) that the additional amount at the same rate of interest was advanced to the Hindu undivided family by the assessee-company on account of comm....
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....nbsp; 1,36,463 1980-81 8,49,672 2,99,852 1981-82 8,49,351 3,23,019 ---------------------------------------------------------------------- The third Member has taken into consideration clause 8 of the memorandum of association of the assessee-company as it existed and come to the conclusio....
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.... that, though the agreement between the assessee-company and the Hindu undivided family was for advancing only Rs. 6 lakhs, the advancing of further amount of Rs. 2.50 lakhs was out of commercial expediency and the payment of interest had to be considered from the angle of a businessman. It has been further found by the Tribunal that the additional funds were advanced to the Hindu undivided family so as to enable the Hindu undivided family to complete construction of additional floors, which were to be made available to the assessee-company at the same monthly rent, which was stipulated in relation to floors which had already been obtained on lease. Thus, it has been found that the funds were granted to the Hindu undivided family in the bus....