TMI Blog2021 (3) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... ct capital borrowed for revenue purpose and capital borrowed for a capital purpose. The assessee is entitled to claim interest paid on borrowed capital after the asset is put to use for business purposes. The loan having been utilized for acquisition of capital asset in the earlier years is thus not an obstacle for treating interest expenditure as revenue expenditure under s.36(1)(iii) of the Act r.w.s. Explanation 8 to s.43A of the Act. The CIT(A) has wrongly applied the tests laid down for applicability on Section 36(1)(iii) of the Act in its non-descript order. We thus find merit in the plea of the assessee for allowability of interest claim in question. - Decided in favour of assessee. - I.T.A. No. 428/Ahd/2018 (Assessment Year: 2014- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. The first appellate order was thus unattended due to a brief lapse on the part of the Director, which was prayed to be condoned. It was further pointed out that the delay occurred is not intentional or deliberate and the aforesaid delay of 73 days occurred has not caused any serious prejudice to the Revenue. No malafide can be imputed for such delay. The learned counsel referred to the decision rendered by the Hon ble Supreme Court in the case of Collector of Land Acquisition vs. Mst. Katiji Ors. 167 ITR 471 (SC) to contend that the substantial justice deserves to be preferred over the technical glitch committed by the assessee in belated filing for plausible reasons. 4. On merits, learned counsel for the assessee pointed out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reiterated that the lender was only a non-banking finance company from whom a loan facility was availed against the security of asset i.e. bending machine. The loan facility so availed has been utilized for the purpose of business as contemplated under s.36(1)(iii) of the Act. It was submitted that the AO has not alleged that any expenditure has been incurred for non-business purposes. Learned counsel finally submitted that the disallowance of interest on loan facility so availed is totally unjustified in the ostensible facts of the case. 5. The learned DR for the Revenue, on the other hand, submitted that the assessee does not deserve condonation of delay on such a vague ground quoted in the affidavit. The learned DR further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with the audited balance sheet, it is evident that the loan facility has been taken against the security of the capital asset. The diversion of loan funds for non-business purposes has not been alleged by the revenue authorities. Besides, the findings of the CIT(A) is quite vague indeed. Section 36(1)(iii) of the Act governs allowability of interest paid in respect of capital borrowed for the purposes of business or profession. As held in Dy. CIT v. Core Health Care Ltd. [2008] 167 Taxman 206 (SC), there is no distinction in Section 36(1)(iii) of the Act capital borrowed for revenue purpose and capital borrowed for a capital purpose. The assessee is entitled to claim interest paid on borrowed capital after the asset is put to use for bus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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