TMI Blog2015 (1) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of setting up new units for the manufacturing of corrugated boxes. - Decided in favour of assessee. - TAX APPEAL NO. 468 of 2007 - - - Dated:- 22-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. FOR THE APPELLANT : MR MANISH BHATT, SENIOR COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE FOR THE RESPONDENT : MR RK PATEL, ADVOCATE JUDGEMENT Per: K S Jhaveri: 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' (hereinafter referred to as 'the Tribunal') dated 28.07.2006 in ITA No. 1604/Ahd/2000 for the Assessment Year 1996-97, the revenue has preferred the present Tax Appeal. 1.1 This appeal was admitted by this Court on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in this batch of civil appeals we are concerned with the assessment years 1992-93, 1993-94, 1995-96 and 1997-98. A proviso has since been inserted in Section 36(1)(iii) of the 1961 Act. That proviso has been inserted by Finance Act, 2003 w.e.f. 1.4.2004. Hence, the said proviso will not apply to the facts of the present case. Further, in our view the said proviso would operate prospectively. In this connection it may be noted that by the same Finance Act, 2003 insertions have been made by way of proviso in Section 36(1)(viia) by the same Finance Act which is also made with effect from 1.4.2004. Same is the position with regard to insertion of a sub-section after Section 90(2) and before the Explanation. This insertion also operates w. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which it has been observed that, for considering whether payment of interest on borrowing is revenue expenditure or not, the purpose for which the borrowing is made is irrelevant. In our view, Section 36(1)(iii) of the 1961 Act has to be read on its own terms. It is a Code by itself. Section 36(1)(iii) is attracted when the assessee borrows the capital for the purpose of his business. It does not matter whether the capital is borrowed in order to acquire a revenue asset or a capital asset, because of that the section requires is that the assessee must borrow the capital for the purpose of his business. This dichotomy between the borrowing of a loan and actual application thereof in the purchase of a capital asset, seems to proceed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 244 (Guj) on similar set of facts and question of law has held in favour of the assessee. This Court held therein that since there was dispute about the fact that the capital borrowed was used for the purpose of the business, the interest on the borrowed capital was deductible under section 36(1(iii) of the Act. This Court while coming to the said conclusion has relied upon the decision of the Apex Court in the case of Core Health Care (supra). 4. Mr. Manish Bhatt, learned Senior Advocate appearing with Ms. Mauna Bhatt, learned advocate on behalf of the revenue is not in a position to dispute the above and is not in a position to show and/or point out any contrary decision. 5. Having heard learned advocates appearing on behalf of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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