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2014 (10) TMI 398 - HC - Income TaxDepreciation on enhances value of assets disallowed – Intention to reduce tax liability or not - Slump sale – Held that:- At the time of transfer of the assets, the assessee had no income for it to reduce its tax liabilities by way of such transfer, both the CIT (A) and the Tribunal had rightly concluded that the AO was in error in invoking Explanation 3 to Section 43 for determining actual cost in the deal - Tribunal was rightly in concluding that Explanation 3 to Section 43 of the Act was not required to be invoked – thus, no substantial question of law arises for consideration – Decided against revenue. Interest expenditure on unpaid purchase consideration – Held that:- Explanation 8 to section 43(1) is brought on the statute book by the Finance Act, 1986, w.e.f 1st April 1974, which explains that where an amount is paid or is payable as interest in connection with acquisition of asset, so much of such amount which is relatable to any period after such asset is first put to use shall not be included and shall be deemed to have been included in the actual cost of such asset – relying upon Commissioner of IncomeTax v. Rajaram Bandekar [1993 (1) TMI 46 - BOMBAY High Court] – the explanation was added with an object of removing doubts with regard to the includibility of interest relatable to any period after the asset has first been put to use, in the computation of its actual cost - CIT (A) as well as the Tribunal have noticed that in view of introduction of Explanation 8 to Section 43 (1) of the Act which was held retrospective in nature, the interest cannot be capitalized which was paid after the slump sale was effected and the factory was in operation, and therefore, expenses were revenue in nature - The directions given to the AO to allow the amount of interest of ₹ 1.57 Crores is upheld – Decided against revenue.
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