COMM.INCOME TAX vs. HP.FUTURISTICS COMMUN.

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ITA/27/2003HC Himachal PradeshHPHC01003853200315 March 2010Bench: HONOURABLE THE CHIEF JUSTICE A.M. KHANWILKAR,HONRABLE MR. JUSTICE R.B. MISRA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the question of whether interest on money borrowed for business expansion is deductible under Section 36(1)(iii) read with Section 37(1) of the Income Tax Act, 1961, is no longer res integra. The Court relied on the decisions of the Apex Court in DCIT Vs. Core Health Care Ltd. (298 ITR 194) and DCIT Vs. Gujarat Alkalies & Chemicals Ltd. (299 ITR 85). These Supreme Court judgments were decided against the revenue and in favour of the assessee. Consequently, the High Court found no merit in the Revenue's appeal. The operative direction was to dismiss the appeal.

What were the facts?

This appeal was filed by the Commissioner of Income Tax (the Revenue) against M/s. Himachal Futuristic Communication (the assessee). The assessment year(s) are not specified in the judgment. The order or action under challenge is the Revenue's contention regarding the deductibility of interest on borrowed money. The amount in dispute is not stated. The procedural history is that the Revenue has appealed to the High Court against a decision that presumably allowed the deduction of interest.

What were the issues?

1. Whether interest on money borrowed for the expansion of the business is liable to be deducted under Section 36(1)(iii) read with Section 37(1) of the Income Tax Act, 1961? Assessee's contention: The assessee likely argued that the interest paid on borrowed funds used for business expansion is a legitimate business expense and therefore deductible. Revenue's contention: The Revenue contended that such interest is not deductible under the specified provisions of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii),Section 37(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

ITA No. 27 of 2003

Decided on 15.3.2010

Commissioner of Income Tax

….Petitioner

Versus

M/s. Himachal Puturistic Communication …Respondents Coram The Hon’ble Mr. Justice Kurian Joseph, Chief Justice The Hon’ble Mr. Justice R.B. Misra, Judge. For the appellant: Mr. Vinay Kuthiala, Advocate,

For Respondents : Mr. M.P. Rastogi with Mr. Raman Sethi, Advocates.

Justice Kurian Joseph, C.J. (Oral) The question that arises for determination in this appeal is whether the interest on the money borrowed for the expansion of the business is liable to be deducted under the provisions of Section 36 (i) (iii) read with section 37 (1) g of the Income Tax Act, 1961. That issue is no more res-integra in view of the decision of the Apex Court in DCIT Vs. Core Health Care Ltd 298 ITR 194 (SC) and DCIT Vs. Gujrat Alkalies & Chemicals Ltd. 299 ITR 85 (SC), decided against the revenue and in favour of the assesse. The appeal is hence dismissed.

( Justice Kurian Joseph ),

Chief Justice

March 15, 2010(sl/p)

( Justice R.B. Misra ),

Judge

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