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2010 (1) TMI 949 - KERALA HIGH COURTRevenue or capital expenditure - assessee has claimed the entire pre-operation expenditure in respect of new industrial unit that was being set up – Held that:- Entire expenditure incurred for setting up of new industrial unit, though under expansion scheme, for the manufacture of product, is capital in nature – section 37 prohibits granting of any deduction which is of a capital nature Deduction of interest on term loan borrowed for acquisition of plant and machinery – Held that:- Interest on borrowed funds for the acquisition of capital asset is not allowable as revenue expenditure until the asset is put to use and accrued interest until the asset is put to use by the assessee will only form part of actual cost for the purpose of depreciation and other allowances allowable under the Act - it is for the officer to verify whether interest is capitalised along with cost of plant and machinery and fixed assets, and if so interest component of the claim allowed by the Tribunal for the year 1997-98 will stand disallowed
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