TMI Blog2001 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also on an interpretation of the agreement dated September 27, 1983, the Tribunal is right in holding that the assessee would not only forfeit the advances but also stand exposed to civil and criminal action and in that sense allowing the payment of interest as contractual obligation?" I.T.R. No. 310 of 1999 is at the instance of the assessee. The questions referred to us are the following: "1. Whether the Tribunal was right in rectifying the order passed under section 256(1) on the ground that there was a mistake apparent from record? 2. Whether, the Tribunal was right in holding that it has inherent power for rectifying the order under section 256(1) for rendering justice?" We may straightaway notice that the questions referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that pursuant to this agreement, the assessee took possession of the property and sold to others the building therein for scrap value. Thereafter the assessee took a sale deed in its name in respect of 65.57 cents of land and sale deeds in respect of the balance extent of 400.43 cents were taken in the names of sister concerns of the assessee. The assessee claimed that the assessee had to pay a sum of Rs.4 lakhs as interest to the vendor pursuant to the agreement for sale, and this payment of Rs.4 lakhs was liable to be deducted as business expenditure. The Assessing Officer rejected the claim of the assessee holding that the entire expenditure was capital expenditure and, hence, the assessee was not entitled to deduction. On appeal by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore prima facie appears to us that the interest paid by the assessee to the vendor in this case is not business expenditure coming within section 37(1) of the Act. In this view, it appears to us to be unnecessary to decide the question whether this could be considered as capital or revenue expenditure incurred by the assessee. In this situation, we need not finally answer the question whether this would be capital expenditure, and the controversy whether it is capital expenditure or revenue expenditure does not arise. On the facts, it is, therefore, clear that this is not a business expenditure to which the assessee is entitled to deduction under section 37(1) of the Act. In view of this position, we answer the questions referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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