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[2009] 180 Taxman 120 (Punjab & Haryana)/[2009] 308 ITR 287 (Punjab & Haryana) [2009] 180 Taxman 120 (Punjab & Haryana) HIGH COURT OF PUNJAB AND HARYANA Commissioner of Income-tax, Ludhiana-I v. Amrit Soap Co.* ADARSH KUMAR GOEL AND L.N. MITTAL, JJ. IT APPEAL NO. 132 OF 2008 (O & M)â-  NOVEMBER 3, 2008 Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital - Assessment year 2001-02 - Assessing Officer had disallowed interest paid by assessee on amount borrowed for establishing a new unit holding that as per proviso to section 36(1)(iii), interest paid on borrowings for pre-operative expenses was not admissible - On appeal, Tribunal deleted addition holding that proviso to section 36(1)(iii) was introduced on statute book by Finance Act, 2003, with effect from 1-4-2004 and since there is no mention in provision that such proviso has been made to operate retrospectively, it was not applicable to assessment year under consideration - Whether Tribunal had taken correct view - Held, yes Section 40A(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments - Assessment year 2001-02 - Assessing Officer disallowed interest paid by assessee to persons covered under section 40A(2)(b) on ground that same was excessive - On appeal, Tribunal deleted disallowance recording finding of fact that interest paid was not higher than rate of interest paid to other creditors - Whether any substantial question of law did arise from Tribunal's order - Held, no CASE REVIEW Deputy CIT v. Core Health Care Ltd.[2008] 298 ITR 194 (SC)followed and relied upon. CASES REFERRED TO Dy. CIT v. Core Health Care Ltd.[2008] 298 ITR 194/ 167 Taxman 206 (SC) [Para 5]. Rajesh Sethi for the Appellant. ORDER Adarsh Kumar Goel, J. - The revenue has preferred this appeal under section 260A of the Income-tax Act, 1961 (the Act) against the order of the Income-tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh, passed in ITA No. 974/Chd./2004, dated 10-11-2005 for the assessment year 2001-02 proposing to raise the following substantial questions of law :- (i) Whether on the facts and law, the Hon'ble Income-tax Appellate…

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