AI Drafter 
TaxTMI 
TaxTMI 
2022 (7) TMI 1088
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....to 2.3:- 2.1 The Learned CIT (A) erred in confirming that the interest received under Section 244A is taxable when the right to receive is under dispute in view of the appeals filed by the department. The Learned CIT (A) erred in holding that the interest under Section 244(A) is taxable, pending final determination of the assessments by the Income-Tax Authorities / Appellate Authorities. 2.2 The Learned CIT (A) failed to apply the ratio of the decision in the case of "Godhra Electricity Co Ld. Vs. CIT (1997) 225 ITR 746 (SC), CIT Vs Shoori Vallabh Das Co 46 ITR 144, CIT Vs Hindustan Housing and Land Development Trust Ltd." 2.3 The Learned CIT (A) failed to apply the decision of the Hon'ble Income Tax Appellate Tribunal in the case of the assessee for the Assessment Year 1984-85 in ITA No. 2897 and 2898 (MDS/87) dated 14.11.1991 wherein it has been held that the interest granted would be assessable as income only in the year during which the proceeding which gave rise to refund and consequential interest reaches finality. 3. Brief facts relating to this issue are that the AO during the course of assessment proceedings noti....
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....he Supreme Court in the case of E.D. Sassoon & Co. Ltd. Vs CIT [1954] 26 ITR 27 squarely supports this view. The fact that the quantum of such interest might vary at a later date, because of one of the reasons mentioned in sub-Section (3) of Section 2444, does not affect this conclusion. 19. Therefore, we respectfully follow the decision of the Tribunal (SB) (supra) and reverse the orders of the CIT(A) on this point and restore those of the AO for both the years" Aggrieved, assessee is in appeal before the Tribunal. 4. We have heard rival contentions and gone through facts and circumstances of the case. Undisputed facts are that the assessee has received interest u/s.244A of the Act on refund and total interest is Rs.48,46,557/-. The ld.counsel for the assessee stated that this taxability of interest u/s.244A of the Act was allowed in favour of assessee by ITAT in assessment year 1984-85 in ITA No.2898(Mds)/87, order dated 14.11.1911 but he very fairly conceded that this issue is covered against assessee in assessee's own case in ITA No.1619 & 1620/Mds/2007 for assessment year assessment years 2001-02 & 2002-03 vide order dated 18.03.2009. Since, the issue is covered....
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....e officials who interact with the officials of the various Govt. Departments also partake of the tea, snacks and lunch. The appellant has not maintained separate accounts in respect of the expenditure under this head which can be precisely related to employees or the visiting officials. In this case an estimate out of this expenditure has to be made in respect of the amount spent on employees as well as the visiting officials. Since the appellant has not maintained any separate accounts under this head, 25% of the expenditure of Rs.16,04,118/- which comes to Rs.4,01,029/- is estimated on entertainment to be related to the employees and non Govt. officials and the same is directed to be allowed. The balance of Rs.12,03,089/- is disallowed. In view of the above, this ground of appeal is partly allowed. 6.1 We noted that the CIT(A) has not doubted the purpose of business i.e., purposes but he has estimated for the reason that the assessee has not maintained separate accounts in respect of these expenditures and the details of employees or visiting officials are not provided. Accordingly, he restricted the allowance of expenditure at 25% and confirmed disallowance of 75% of expendit....
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.... has been fully eroded as per the audited balance sheet for the year ended 31.3.2002. The realisable value of the assets will not even meet the liabilities of secured creditors in full. Consequently, our company has written off the value of investments in our books of accounts for the year ended March 31, 2003 after retaining a nominal value of Rs.1,000/- each, under equity capital, preference capital and non convertible debentures. The write off so made amounted to Rs.641.32 lakhs." 8.2 The AO required the assessee to explain as to why the investments written off claimed by assessee in Ponni Sugars (Orissa) Ltd., be not treated as capital. The assessee replied stating various reasons that the investment in Ponni Sugars (Orissa) Ltd., falls for the purpose of business and the above three elements i.e., investment in equity capital, 16% non convertible debentures and zero coupon redeemable preference shares are for the purpose of assessee's business and for the commercial expediency for the reason that the Ponni Sugars and Chemicals Ltd., which was set up in 1984 for installation of coal fired boiler and also set up a new sugar mill in Balangir, Orissa from 1992 onwards. It was e....
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....oducing the submissions of the assessee and the submissions made before AO, finally confirmed the action of AO vide para 8.6 as under:- 8.6 I have gone through the assessment order and submissions of the appellant. The Assessing Officer has very elaborately discussed this issue in the assessment order and has come to a conclusion why the investments which are written off cannot be classified as expenditure u/s 37 of the IT Act. Having gone through the discussion of the Assessing Officer and the arguments of the appellant in their submissions at the time of appellate proceedings, I find no infirmity in the findings of the Assessing Officer in treating the investments as capital in nature. This ground of appeal stands dismissed. Aggrieved, now assessee is in appeal before the Tribunal. 9. Before us, the ld.counsel for the assessee Shri G. Baskar, made submissions that the Balangir unit of Ponni Sugars (Orissa) Ltd., remains idle for many years and the revival of the unit seems to be impossible. Even the assessee took efforts to sell off the unit but could not succeed. The Ponni Sugars (Orissa) Ltd., has become sick and registered as sick unit with Board for Industrial ....
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....ck industrial unit. Finally, BIFR declared the assessee as a sick unit. Even the lead financial institution i.e., ICICI bank has opted for sale of the unit but the offers received for sale of Balangir unit was not even sufficient to meet the dues of secured loans and there was no possibility of getting amount out of sale proceeds to meet the dues of unsecured creditors, preference shareholders and equity shareholders. In such circumstances, whether the loss or losses of investment claimed by assessee as write off of investment u/s.37 of the Act be allowed. This has been answered by Hon'ble Madras High Court in the case of Electronic Corporation of Tamilnadu Ltd., supra, wherein another decision of co-ordinate bench of Hon'ble Madras High Court in Tamilnadu Industrial Investment Corp. Ltd., supra, is also considered and the Hon'ble High Court exactly on the same facts allowed the claim of assessee to write off of investment vide para 10 to 14 as under:- 10. We have perused the order passed by the CIT(A) and in our considered view, the reasoning given by the CIT(A) is just and proper. The CIT(A) has analysed the objects of the assessee as to why it was incorporated and the n....
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....s" decisive. 12. As held in the above referred decision, no inference can be drawn with regard to description of the stock in the balance sheet as investments and this cannot be a decisive fact. In respect of more or less an identical case, the Division Bench in the case of Commissioner of Income Tax v. Tamilnadu Industrial Investment Corporation Ltd., [(2017) 394 ITR 0255 (Mad) held the same in favour of the assessee. The question which fell for consideration was whether the Tribunal was right in holding that the shares are stock-in-trade of the assesee company. The Division Bench took note of the Memorandum and Articles of Association which spelt out the main activities of the assessee (TIIC Limited) and held that the assessee was incorporated solely for the purpose of ensuring and facilitating growth and development of industries in the State of Tamilnadu and investments by way of subscription of shares is solely on account of the under writing operations. Further, it held that the investments are in the nature of stock-in-trade and cannot be held otherwise. In our considered opinion the decision in the case of TIIC Limited (cited supra) would squarely cover the case on....