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2019 (4) TMI 509 - AT - Income TaxCapitalization of interest u/s.36(1)(iii) - addition to capital WIP from the date of sanction of loan as against disallowance made for the whole year in the assessment order - HELD THAT:- Hon’ble Supreme Court in the matter of DCIT v/s. Core Healthcare Ltd. [2008 (2) TMI 8 - SUPREME COURT OF INDIA] wherein it is held that interest on borrowed capital to be allowed and makes no distinction between money borrowed to acquire a capital or a revenue asset and section 36(1)(iii) requires that assessee must borrow capital and the purpose of the borrowing must be for business which is carried on by the assessee in the year of account. Unlike, section 37 which expressly excludes an expense of a capital nature, section 36(1)(iii) emphasizes is the user of the capital and not the user of the asset which case into existence as a result of borrowed capital. The legislature has, therefore. made no distinction in section 36(1)(iii) between “capital borrowed for a revenue purpose” and “capital borrowed for a capital purpose”. An assessee is entitled to claim on borrowed capital provided that capital is used for business irrespective of what may be the result of using the capital which the assessee has borrowed. Further, the words “actual cost” do not find place in section 36(1)(iii) of the Act. In this case, assessee has taken loan from Bank/financial institution and paid interest and the same is reflecting in the balance-sheet of the assessee. Therefore, we are of the opinion that relief should be granted to the assessee/appellant. Levy of penalty u/s.271(1)(c) and charging of interest u/s.234-A, 234-B, 234-C & 234-D - HELD THAT:- We have granted relief to the assessee. Therefore, we do not want to adjudicate separately.
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