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2015 (10) TMI 949 - HC - Income TaxInterest paid on assets prior to their installation - whether can be taken as their cost of installation and permitting deduction under section 43(1)? - Held that:- The first question is covered in favour of the assessee in view of the judgment of the Supreme Court of India in Deputy Commissioner of Income-tax Vs. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT OF INDIA] particularly the principles of law laid down in paragraphs 11, 13 and 14 thereof wherein held Interest on borrowings utilized for purchase of machines are allowed to be deducted because these machines have been used in business which is not disputed by Mrs. Soma Chatterjee, learned Advocate for the appellant. Therefore the question no.1 is answered in the affirmative, against the Revenue and in favour of the assessee. Expenses incurred for replacing non-Y2K compliant computer with Y2K compliant computer - whether can be claimed as a deduction under section 36(1)(xi)? - Held that:- From a reading of the definition of “computer system” it is evident that it is a device or collection of devices which includes input and output support devices and is capable of being used in conjunction with external files or more which contain computer programmes, electronic instructions, input data and output data. In the instant case the Tribunal, being the ultimate fact finding authority, found that “Therefore, on the basis of the facts and circumstances as brought on record, we are of the view that the capital expenditure required to replace the entire computer but within a network system should be allowed as an expenditure as was the intention of the legislation in the Finance Act, 1999 by inserting section 36(1)(xi).” Thus the expenditure was for replacement of a system within a larger system which is permissible in law. Hence, the Tribunal was justified in allowing the claim of the appellant. The judgment in CIT vs. Asian Paints Ltd. (2013 (1) TMI 768 - BOMBAY HIGH COURT) supports the stand of the respondent. - Decided in favour of the assessee.
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