Law:

Section:

Section 36(1)(iii), read with section 43(1), of the Income-tax Act, 1961 - Interest on borrowed capital - Assessment year 1992-93 - Whether interest paid on capital borrowed for purpose of acquisition of an asset can be allowed as revenue expenditure only when such asset is first put to use and starts yielding income and not for any period prior thereto - Held, yes - Whether proviso to section 36(1)(iii) added by Finance Act, 2003, is merely clarificatory as it has made explicit what was already implicit - Held, yes Section 43(1) of the Income-tax Act, 1961 - Actual Cost - Assessment year 1992-93 - Whether it is not right to say that provisions of sections 36 and 43 are to be read in isolation - Held, yes - Whether in terms of Explanation 8 to section 43(1), interest on capital borrowed for acquisition of an asset for period before asset is first put to use is to be added towards its actual cost and for period thereafter it is not permitted to be added towards its actual cost - Held, yes - Whether language of section 43(1), Explanation 8, makes out no distinction in acquisition of an asset when a new business is being set-up or when expansion is being carried out - Held yes Interpretation of statutes : Rule of purposive interpretation FACTS The assessee-company, which was already engaged in business of yarn, started setting-up of a new unit for which it incurred expenditure on interest on loans. It filed its return of income for the assessment year 1992-93 claiming deduction on account of interest under section 36(1)(iii), contending that the new unit had not come into commercial production and the same was nothing but expansion of its earlier business under the same management and administration. The Assessing Officer, relying upon Explanation 8 to section 43(1) and keeping in view the admitted fact that the loan was raised for setting-up a new unit for creating a capital asset which was yet to come into production, held that the interest for the period prior to that could not be allowed as revenue expenditure. On appeal, the Commissioner (Appeals) allowed the assessee's claim. On appeal, the Tribunal upheld the order of the Commissioner (Appeals). On account…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492