TMI Blog2007 (2) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... in both taxcases: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the interest paid under deferred payment scheme under which certain assets acquired is capital in nature and investment allowance is allowable on the same?" 2. The assessment years with which we are concerned are 1982-83 and 1985-86. The assessee is a company. The assessee claimed investment allowance on the interest paid under the deferred payment scheme through which certain assets were acquired, which was negatived by the assessing officer. 3. The Commissioner of Income-tax (Appeals) allowed investment allowance holding that the interest accrued under the deferred paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank of the purchaser for discounting within two months and the bank, in turn, would present the bill for rediscounting with I.D.B.I. 8. According to the assessee, the total amount of the instalments including the interest is the actual cost of the assets purchased within the meaning of section 43(1) of the Income-tax Act, 1961 (in short "the Act"), the relevant portion of which reads as under: "43(1). 'actual cost' means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority." 9. On the other hand, the Revenue contends that the interest paid on capital borrowed after commencement of business cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 8 to section 43(1) of the Act shows that it was added with the object of removing doubts with regard to the includibility of interest relatable to any period after the asset has first been put to use, in the computation of its actual cost. By this Explanation, it has been declared by Parliament that "where any amount is paid or is payable as interest" in connection with the acquisition of an asset "so much of such amount as is relatable to any period after such asset is first put to use shall not be included and shall be deemed never to have been included," in the actual cost of such assets. The Parliament, in the above Explanation, has taken full care to couch the Explanation in the widest possible ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of depreciation and development rebate applying Explanation 8 to section 43(1) of the Income-tax Act, 1961. The view taken by the Tribunal is not justified." 13. The above view has also been followed by this Court in CIT v. L.G. Balakrishnan and Brothers Ltd. [2001] 247 ITR 131. 14. This Court in C.I.T. v. Textool Co. Ltd. [2003] 263 ITR 523 also held that in view of Explanation 8 to section 43(1) any amount paid as interest in connection with the acquisition of an asset shall not be included and shall never be deemed to have been included as part of the actual cost of the asset. 15. In this view of the matter, we hold that the amount of interest payable on deferred payment scheme could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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