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C.I.T. vs M/S. Modern Spinners Ltd. on 14 March, 2016
In this regard, we also find support from the judgement passed
by Hon'ble High Court of Delhi which was confirmed by Hon'ble
Supreme Court in the case of Commissioner of Income-tax vs.
Modern Spinners Ltd. [2016] 76 taxmann.com 20 (SC) wherein
SLP of the department was dismissed, Hon'ble court held as under
Section 28 in The Income Tax Act, 1961 [Entire Act]
Section 43B in The Income Tax Act, 1961 [Entire Act]
Section 12 in The Income Tax Act, 1961 [Entire Act]
The State Of Mizoram Act, 1986
Section 147 in The Income Tax Act, 1961 [Entire Act]
Mcdowell And Company Limited vs Commercial Tax Officer, Nacharam ... on 14 March, 1996
b. The loan/interest itself has not fallen due for repayment, yet as the
amount of loan sanctioned in not received completely".
4.0 The reply of the assessee has been considered and not acceptable.
The loan was sanctioned by Govt. of Maharashtra between June 1998
to March 1999 and the assessee was making interest provision from
F.Y 1998-99 onwards. The accumulated interest debited and not paid
from F.Y 1998-99 to 2013-14 was Rs 37.60 Crore. Thus, by not
withdrawing an amount of Rs 5.62 lakh, the company had not paid the
government loan. Though, the assessee claimed that neither the
principal nor loan was repayable. It was claiming deduction of
provisions for interest knowing fully well that it was never payable. As
per provisions of section 37 of the Act, provision for unascertained
liability is not allowable deduction for purposes of income tax. Further,
it has been held by the Supreme Court in McDowell and Co. Ltd Vs
Commercial Tax Officer (SC) 154 ITR 148 that colorable devices are
not part of tax planning Tan View of the above a sum of Rs
2,42,00,000/- for AY. 2014-15 remains unexplained. Hence, an amount
of Rs. 2,42,00,000/- debited to profit and loss loss account as interest
on loan from the Govt. of Maharashtra as explained above and not
paid to the Government is disallowed and added to the income of the
assessee for the AY 2014-15."
Section 148 in The Income Tax Act, 1961 [Entire Act]
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