|
II. Direct Taxes Case Laws:
1. CIT Vs. Schutz Dishman Bio-Tech Pvt. Ltd., Tax Appeal No. 958 of 2015, Date of Order: 21.12.2015, High Court of Gujarat
Whether
the Ld. AO was justified in construing that frequent movement of funds
between related entities as reflected in ledger accounts is nothing but
deemed dividend as per Section 2(22)(e) of the Act.
Held_No
The
assessee has maintained current accommodation adjustment account with
its sister concern. The AO contended that these transactions are in
nature of loans & advances falling within ambit of section 2(22)(e)
& accordingly provisions of section 201(1) & 201(A) were invoked
by him for non deduction of TDS. The Hon’ble ITAT upheld the decision
of the CIT (A) that transactions in the nature of loans and advances are
usually very few in number whereas in the present case, such
transactions are in the form of current adjustment accommodation
adjustment entries wherein there is a movement of fund both ways, on
need basis.
The
Honble High Court has upheld the decision of ITAT & CIT(A) that
looking to large number of adjustment entries in the accounts between
two entities, the amounts were not in the nature of loan or deposit, but
merely adjustments, application of section 2(22)(e) of the Act would
not arise.
(Please click here for judgment)
2. ITO Vs. M/s. First American Securities Pvt. Ltd., I.T.A. No. 4768/Del./2012 Date of Pronouncement: 11.01.2016, ITAT-Delhi
Whether
interest paid by an investment company on loan taken for investment in
shares of closely associated concern to acquire substantial control, is
revenue in nature and allowed u/s 36(1)(iii) of the Act.
Held_Yes
The
assessee was engaged in business of investments and purchased shares of a
jointly controlled entity. The Ld. AO has contended that interest paid
on loan taken for said investment is capital in nature as assessee made
investment for purpose of acquiring substantial control over the entity,
shares are not freely tradable and investment is classified as long
term, moreover no business activity was carried out during the year
except such investment. Whereas, the CIT (A) has held that since it is
very specifically mentioned in the objects of the MOU that assessee is
to make strategic investment in the business entities and capital was
borrowed for the purpose of business and was not utilized for
acquisition of any asset or for extension of any business, therefore,
same is allowed as revenue expenditure.
The
Hon’ble ITAT has upheld the decision of the CIT(A) by placing reliance
on CIT v. Phil Corpn. Ltd. [2011] 14 taxmann.com 58 (Bom.) & Srishti
Securities (P.) Ltd. vs. JCIT 2005-(148) Taxman 0049 (ITAT-Mum).
(Please click here for judgment)
|
New User? 
Subscribe Now