TaxTMI 
TaxTMI 
1981 (7) TMI 89
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....bsp; Rs. 2,93,277 Assessment year 1974-75 Rs. 2,82,638 Assessment year 1975-76 Rs. 2,13,379 For the assessment year 1973-74, the ITO ....
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.... the learned representative of the assessee contended that Induri Farms used to supply raw materials like cow's milk and eggs to the assessee. Though it was true that the said company was a wholly-owned subsidiary of the assessee-company, the advance made to Induri Farms was in the course of the assessee's business to secure regular supply of raw materials. Now once it is found that advance was made in the course of the assessee's business, then the question whether interest was charged thereon or not is clearly immaterial. He referred to the decisions reported at T. J. Lalvani v. CIT [1970] 78 ITR 176 (Bom.), CIT v. Rohtas Industries Ltd. [1979] 120 ITR 110 (Cal.), CIT v. Mysore Sugar Co. Ltd. [1962] 46 ITR 649 (SC), CIT v. Bombay Samachar....
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.... 4. In Bombay Samachar, it was, inter alia, held as follows: "The only conditions required to be satisfied in order to enable the assessee to claim a deduction in respect of interest on borrowed capital under section 10(2)(iii) are : firstly, that money must have been borrowed by the assessee : secondly, it must have been borrowed for the purpose of business, and : thirdly, the assessee must have paid interest on the said amount and claimed it as a deduction. It is not the requirement of the provision that the assessee must further show that the borrowing of the capital was necessary for the business so that if at the time of borrowing the assessee had sufficient amount of its own, the deduction could not be allowed. The fact that the a....
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.... Bombay Samachar's case. That apart, as rightly pointed out by Shri Dastur, no specific advance was made out of borrowed funds to the said company. If the assessee, as a prudent businessman, thought fit not to charge interest on advances which were admittedly made in the course of the assessee's business and in particular to secure regular supply of his raw material, then it is not open to the revenue authorities to dispute such an act which is otherwise not found to be malafide or for some malafide purpose. In the present case both the ITO and the Commissioner (Appeals), have proceeded to disallow a portion of the interest on the loans borrowed by the assessee. The loans were, admittedly, borrowed for the purpose of business and in the ins....
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....gh an association or a body which has been approved for the purpose of this section by the prescribed authority, any expenditure in the provision of any goods, services or facilities specified in clause (b) to a person who is a cultivator, etc., the company shall, subject to the provisions of this section, be allowed a deduction of a sum equal to one and one-fifth times the amount of such expenditure incurred during the previous year. The controversy at issue is whether the depreciation as claimed by the assessee for both the years could be treated as the amount of such expenditure incurred by the assessee during the previous year. Now the expression 'expenditure' which is not defined in the Act was judicially interpreted in the case of Ind....