TMI Blog1996 (8) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ing question has been referred by the Income-tax Appellate Tribunal under section 256(1) of the Income-tax Act, 1961, for short " the Act ", for the opinion of this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of interest received should not be considered for being taxed as revenue but has to be set off against intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. The Tribunal directed the Assessing Officer to adjust the interest. Thereafter, the Revenue requested the Tribunal to refer the above question for the opinion of this court. Hence, the present reference. We have heard Mr. U. Bhuyan, learned junior standing counsel appearing on behalf of the Revenue, and none appears on behalf of the assessee. Mr. Bhuyan submits that in the facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of plant and machinery would form part of the " actual cost " of the assets to the assessee within the meaning of the expression in section 10(5) of the Indian Income-tax Act, 1922, and whether the assessee would be entitled to depreciation allowance and development rebate with reference to such interest also. The Supreme Court after noticing the Statement on Auditing Practices issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the contrary. Therefore, the Supreme Court held that interest incurred during the period of construction of plant should be treated as an addition to the cost of the project unless of course the loan was borrowed for working capital purposes. Such interest would go into the capitalisation amount. In view of the decision rendered by the apex court in Challapalli Sugars Ltd. [19751 98 ITR 167, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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