IT : Carry forward and set off of business loss is allowable against lease rental income derived from commercial assets
IT : Where borrowed fund was used for capital work in progress, interest on said fund is allowable under section 36(1)(iii)
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[2014] 52 taxmann.com 20 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax
v.
Translam Ltd.*
TARUN AGARWALA AND DR. SATISH CHANDRA, JJ.
IT APPEAL NOS. 195 OF 2005 & 568 & 591 OF 2011†
SEPTEMBER 17, 2014
I. Section 72, read with section 28(i), of the Income-tax Act, 1961 - Losses - Carry forward and set-off of business losses (Rental income) - Assessment years 1995-96 to 1997-98 - Whether change in mode and manner of deriving income by exploiting commercial assets either by self or by leasing same would not change character of income and such income would continue to be 'Business income' - Held, yes - Whether carry forward and set-off of business loss is allowable against lease rental income derived from commercial asset - Held, yes [Para 8] [In favour of assessee]
II. Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital (Capital work in progress) - Assessment years 1995-96 to 1997-98 - Assessee had borrowed some funds for acquisition of assets on which interest was paid - Assessing Officer disallowed deduction on account of interest as funds were not utilized for desired purpose as no new unit was started by assessee during year - Whether borrowed fund being used for capital work in progress, interest on said fund was allowable - Held, yes [Para 13] [In favour of assessee]
III. Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income (G.P. rate) - Assessment years 1995-96 to 1997-98 - Assessing Officer had made addition by observing that GP rate was lower in comparison to earlier years - In earlier years, excise duty was separately credited to excise duty payable account, whereas, during assessment year under consideration, excise duty was included in sale price - Whether no defects being pointed out by Assessing Officer in books addition was to be deleted - Held, yes [Para 16] [In favour of assessee]
IT : Where borrowed fund was used for capital work in progress, interest on said fund is allowable under section 36(1)(iii)
■■■
[2014] 52 taxmann.com 20 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax
v.
Translam Ltd.*
TARUN AGARWALA AND DR. SATISH CHANDRA, JJ.
IT APPEAL NOS. 195 OF 2005 & 568 & 591 OF 2011†
SEPTEMBER 17, 2014
I. Section 72, read with section 28(i), of the Income-tax Act, 1961 - Losses - Carry forward and set-off of business losses (Rental income) - Assessment years 1995-96 to 1997-98 - Whether change in mode and manner of deriving income by exploiting commercial assets either by self or by leasing same would not change character of income and such income would continue to be 'Business income' - Held, yes - Whether carry forward and set-off of business loss is allowable against lease rental income derived from commercial asset - Held, yes [Para 8] [In favour of assessee]
II. Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital (Capital work in progress) - Assessment years 1995-96 to 1997-98 - Assessee had borrowed some funds for acquisition of assets on which interest was paid - Assessing Officer disallowed deduction on account of interest as funds were not utilized for desired purpose as no new unit was started by assessee during year - Whether borrowed fund being used for capital work in progress, interest on said fund was allowable - Held, yes [Para 13] [In favour of assessee]
III. Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income (G.P. rate) - Assessment years 1995-96 to 1997-98 - Assessing Officer had made addition by observing that GP rate was lower in comparison to earlier years - In earlier years, excise duty was separately credited to excise duty payable account, whereas, during assessment year under consideration, excise duty was included in sale price - Whether no defects being pointed out by Assessing Officer in books addition was to be deleted - Held, yes [Para 16] [In favour of assessee]
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