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TMI Blog2011 (4) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of this Court : (a) Whether on the facts and circumstances of the case, the Tribunal acted illegally and perversely, in holding that the interest of Rs. 9,05,976 paid by the appellant on Term Loan raised for acquiring asset in its existing business is disallowable in view of proviso to section 36(1)(iii) of the Act? (b) Whether on the facts and circumstances of the case, the Tribunal acted perversely in interpreting the words 'Expansion and Extension' as synonymous in spite of the fact these two words have been used in the different sections separately and carry different meaning? (c) Whether on the facts and circumstances of the case, the Tribunal acted perversely and illegally in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in the facts of the present case was hit by the proviso to section 36(1)(iii) of the Act and was inadmissible revenue expense. 9. Learned counsel for the assessee submitted that there was no extension of business and, therefore, the proviso to section 36(1)(iii) did not apply. According to the learned counsel, it was only an expansion in business which had taken place and the same was not covered within the term 'extension'. Learned counsel argued that in section 36(1)(iii) the word extension has been used whereas sections 80-IC(8)(ix) and 80-IE(7)(iii) contain the word expansion. Further the expression restructuring and reconstruction has been stated in section 80-ID(3)(i), 80-IB and 33B of the Act. Section 80-IA(4)(iv) has the term re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital borrowed within the meaning of this clause;" 11. The effect of proviso to section 36(1)(iii) inserted by the Finance Act, 2003 w.e.f. 1-4-2004 relating to assessment year 2004-05 and subsequent years is to disallow interest on moneys borrowed for acquiring a capital asset till the date on which the asset was brought to use even if it is for extension of existing business. 12. After considering the issue, we do not find any substance in the contention of the learned counsel. It would at the first place be quite apt to have a glimpse of the dictionary meanings of the two words. According to Chambers 21st Century Dictionary, the meaning of word Extension, inter alia, is the process of extending something or the state of being extended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he role of capacities and up-gradation of technology in the success of business which was the instrument for increasing the spindle capacity which, in turn, was to be financed by the term loan raised by the assessee-company during the year. In the facts before the Hon'ble Delhi High Court in Modi Industries Ltd.'s case (supra) relied upon by the assessee, person was engaged in the business of manufacture of diverse items and a new item was added to its manufacturing business, whereas there was complete unity or control and utilisation of common funds and it was held that the business of manufacturing of new items was an extension of the business and not a new business. In the facts before us, though the same line of business is being carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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