TMI Blog1993 (4) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to the asst. yr. 1984-85. Valuation was, therefore, held to be premature because work in unit No. 2 was at Rs. 4,52,760 as on 30th Sept., 1983. Registered valuer was also engaged by the assessee, who estimated the cost at Rs. 4,56,900. The Departmental Valuation Officer (DVO), however, estimated the cost at Rs. 8,89,540. 3. The learned Departmental Representative has argued that the assessee did not extend sufficient co-operation during the course of valuation and, therefore, valuation made by the DVO should be accepted. If certain items are constructed in subsequent years, it should have been explained to the Valuation Officer (VO). It has also been submitted that unit No. 1 had been completed and, therefore, valuation cannot be cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter. If the work was not complete, valuation report suffers from infirmity. The CIT(A) was, therefore, right when he directed the Assessing Officer to take into consideration total cost of construction. Ground No. 1 has, therefore, no force and is rejected. 6. Ground No. 2 relates to deletion of addition of Rs. 1,36,573 made on account of interest paid by the assessee on borrowed capital. The learned Departmental Representative has argued that the interest has been paid on capital borrowed for the purpose of purchasing machinery. It was, therefore, not to be treated as Revenue expenditure but in the nature of capital expenditure. 7. The learned counsel, on the other hand, argued that the assessee had purchased machinery for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid decision, the learned counsel has argued that the question of interdependence was very much there in the case before us also and, therefore, it could not be said that the machinery worth Rs. 13,45,063 was an independent unit or entity. Since unit No. 2 was under construction but the machinery as a whole has been purchased by the assessee and, therefore, part of machines could not be treated to be a separate machinery for the purpose of disallowance of interest. Unit No. 2 was only an extension of the existing business and interest paid by the assessee was, therefore, admissible as the entire work was interconnected. Capital was borrowed by the assessee for extension of existing business and not for setting up a new business. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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