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2017 (5) TMI 1628 - RAJASTHAN HIGH COURTNature of expenditure - Treatment to payment of interest - revenue or capital expenditure - Held that:- ITAT was right and justified in treating the payment of interest as revenue expenditure even when the capital borrowed was used for purpose of capital assets. Liabilities under Section 41 - Held that:- The issue is squarely covered by the decision of Supreme Court in the case of Commissioner of Income Tax Vs. Sugauli Sugar Works (P) LTD [1999 (2) TMI 5 - SUPREME COURT] as held Just because an assessee makes an entry in his books of account unilaterally, he cannot get rid of his liability. The question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but it is a matter which has to be decided only if the creditor is before the concerned authority - mere entry in the books of account of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end. Apart from that, that will not by itself confer any benefit on the debtor as contemplated by the section. Payment of interest used for purchased of capital assets - Held that:- The issue is squarely covered by the decision of Supreme Court in the case of Empire Jute Co. LTD. Vs. Commissioner of Income Tax [1980 (5) TMI 1 - SUPREME COURT] wherein held if payment has to be made for securing additional power every week, such payment would also be part of the cost of operating the profit making structure and hence in the nature of revenue expenditure, even though the effect of acquiring additional power would be to augment the productivity of the profit-making structure. On the same analogy payment made for purchase of loom hours which would enable the assessee to operate the profit-making structure for a longer number of hours than those permitted under the working time agreement would also be part of the cost of performing the income earning operations and hence revenue in character. Pre-operative expenses - Held that:- The issue in the case of Commissioner Income Tax Vs. Smt. Jyoti Devi[2008 (7) TMI 954 - RAJASTHAN HIGH COURT] - Appeal decided in favour of assessee.
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