TaxTMI 
TaxTMI 
1991 (9) TMI 41
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....thout the transfer of corresponding liability incurred for the starting of the business can be held to be in the course of the assessee's business of promoting companies?" The assessee is a company carrying on the business of manufacture and sale of electrical insulating press boards and multiply press paper. Articles 16, 19 and 21 of the articles of association and the memorandum of objects of the company also authorise it to carry on the business of promoting other companies. In pursuance of that object, the assessee obtained on August 14, 1973, a licence from the Government of India for the establishment of a new industrial undertaking at Ramanagaram, Bangalore, for the manufacture of mica paper with the intention of transferring it t....
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.... : (In rupees) -------------------------------------------------------------------------------------------------------------------------------------------------- On buildings For technical Others including Total know-how for machinery ----------------------------------------------------------------------------------------------------------------------------------------------- 1974 1,17,627 80,000 - 1,97,627 1975 4,25,262 - - 4,25,262 1976 3,43,420 - 21,000 3,13,443 6,77,863 ------------------- ------------------------ -------------------------- --------------------------- 8,86,309 80,000 3,34,443 13,00,752 1977 3,43,868 - 8,39,123 11,82,991 --------------------- ----------------------- ----------------....
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....uring the years in question, i.e., 1977-78 and 1978-79, was contested by the Revenue on the ground that the borrowings were to create assets which were diverted as the capital of the new company. The Appellate Tribunal, however, did not agree with the stand taken by the Revenue and allowed the appeals filed by the assessee before it. Hence, these references. The Appellate Tribunal held that, (1) the assessee is a company carrying on the business of manufacture and sale of electrical insulating press boards and multiply press paper ; (2) the new undertaking started by the assessee (which is now vested in the new company called Laxman Isola Ltd. ) was to manufacture mica paper; (3) the articles of association and the memorandum of associat....
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....incurred the expenditure for setting up the undertaking called Mica Project, it constituted part of its own business though it may have had an idea of transferring it eventually to the new company being promoted by it. In the circumstances, use of the borrowed funds for meeting the expenditure for setting up that undertaking could only be regarded as laying out of the borrowed capital for the purpose of the assessee's own business. It is now well-settled that even where the borrowed capital is used for meeting the capital expenditure, the interest paid thereon should be allowed as a deduction if the borrowal is after the setting up of the business." The Appellate Tribunal was justified in concluding, from the facts and circumstances, tha....
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....tabganj Sugar Mills Ltd. v. CIT [1961] 41 ITR 272, as under (at page 274) : The question whether, on the application of the settled tests, different ventures carried on by an individual or a company form the same business is a mixed question of law and fact. Certain principles are applied to determine whether, on the facts found, a legal inference can be drawn that the different ventures constitute separate businesses or, viewed together, can be said to constitute the same business. These principles were stated by Rowlatt J. in Scales v. George Thompson and Co. Ltd. [1927] 13 TC 83, 89. The learned judge observed : ".... the real question is, was there any interconnection, any interlacing, any interdependence, any unity at all embraci....