TMI Blog1995 (7) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the following questions of law arising out of the order of the Tribunal dated March 20, 1986, in respect of the assessment year 1983-84 under section 256(1) of the Income-tax Act, 1961 : " 1. Whether the Tribunal was right in law in treating interest as income and as income from other sources ? 2. Whether the Tribunal was right in law in not reducing interest in capital expenditure ? 3. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals), the appellate authority observed that the interest income would be carried over and allowed to be reduced from the capital cost of the assets. The alternative contention that if it is treated as income then proportionate administrative expenses which were incurred as pre-operative expenses should be allowed as a deduction from the interest income was not considered by the Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 35D can be allowed only from the year in which the business commences. In the year, the business has not commenced and, therefore, the claim of the assessee cannot be entertained. " We have considered over the matter. It is an admitted position that the business activity was not carried on by the assessee and, therefore, the interest received has to be treated as income from other source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in treating the interest income as " income from other sources ". The Tribunal was further right in not reducing the interest from capital expenditure. The expenditure claimed by the assessee was duly allowable under section 35D and, therefore, could not be adjusted from the income by way of interest received during the year under consideration. Consequently, the reference is answered in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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