TMI Blog2012 (9) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... pital on which interest was paid was utilized for the purpose of constructing/establishing further business centers - thus the interest paid has to be allowed as deduction u/s 36(1)(iii) as in existence during the assessment year 1999-2000 as a transaction of borrowing is not the same as a transaction of investment - in favour of assessee. Disallowance of repairs and maintenance charges - ITAT allowed it - Held that:- The appellant is in the business of running business centres which are required to be kept in proper condition with appropriate ambiance. Therefore, expenses on account of repairs and maintenance is an on going process for a business such as the one run by the respondent assessee. Further, the quantum of amount spent can ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case and in law, the Tribunal is right in deleting charging interest u/s. 234D in respect of proportionate interest paid on loans borrowed and utilized for capital work in progress and advance against the capital work in progress and advance against the capital expenses? Regarding Question (a) : 3) The respondent-assessee is engaged in the business of operating business centres. During the assessment years 1999-2000 the respondent-assessee had debited an amount as interest of Rs.1.38 crores on borrowed funds of Rs.8.14 crores. The respondent assessee in the aggregate had funds of Rs.41.65 crores as on 31/3/1999.The capital work in progress declared by the respondent-assessee was Rs.89.49 lacs. The Assessing Officer was of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under : 36(1)The deduction provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- (i)......... (ii)------ (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession: [Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction.] Explanation-R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s running business. Consequently the expenditure incurred on payment of interest for borrowed funds which have been used for the purpose of respondent's business is a deductable expense as held by the Supreme Court in the matter of Core health Care Ltd. (supra) . 9) The assessment year involved in the present proceeding is 1999-2000. At that point of time any amount of interest paid on borrowed funds even in respect for utilization for capital purposes would be allowed as a deduction provided the same is for the purposes of the business. The decision of the Supreme Court in the matter of Core Health Care Limited (supra) concludes the issue in favour of the respondent-assessee. In the above case, the decision of the Apex Court in the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1999-2000. In view of the above, question (a) raises no substantial question of law and is therefore, dismissed. Regarding Question (b) : 10) During the assessment year 1999-2000, the respondentassessee had sought allowance of expenses on account of repairs and maintenance aggregating to Rs.1.39 crores. During the course of the assessment proceedings the Assessing officer was of the view that the expenditure on repairs and maintenance was capital in nature and therefore,the expenses incurred have to be capitalized and cannot be allowed as a revenue expenditure. In view of the above, in his order dated 30/3/2005, the Assessing Officer added an amount of Rs.1.39 crores to the respondent-assessee's income for assessment year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new asset and the repairs and maintenance of existing building was an on going process carried out by it so as to augment the revenue in running its business centres. Consequently, he submits that the order of the Tribunal ought not to be interfered with. 14) We find that the appellant is in the business of running business centres. Such business centres are required to be kept in proper condition with appropriate ambiance. Therefore, expenses on account of repairs and maintenance is an on going process for a business such as the one run by the respondent assessee. Further, the quantum of amount spent can never be a factor by itself to conclude that the expenses are of a capital nature and not expenses on revenue account. In fact, this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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