1975 (11) TMI 17

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..... iness in the manufacture and sale of yarn. In the assessment proceedings relating to the assessment year 1966-67, corresponding to the year ending March 31, 1966, they claimed to capitalise their pre-production, overhead and other expenditure to the extent of Rs. 2,46,830 and claimed depreciation and development rebate on such capitalised amount. This was on the basis that they were necessary expe .....

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..... chinery will have to be understood as in commercial parlance and that all pre-production expenditure incurred whether directly or indirectly in connection with the purchase, supervision or erection of the plant and machinery and the construction of the building would have to be capitalised. Though the Appellate Assistant Commissioner was satisfied that most of the items of expenditure claimed by t .....

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..... Reference was asked for mainly on the ground that the decision in Commissioner of Income-tax v. Standard Vacuum Refining Co. of India Ltd. [1966] 61 ITR 799 (Cal) had been taken in appeal to the Supreme Court and that that view also requires re-consideration. Subsequently, this court, following the said decision, held in Commissioner of Income-tax v. L. G. Balakrishnan & Bros. (P.) Ltd. [1974] 95 .....

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..... assets into existence and to put them in working condition. In case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalised and added to the cost of the fixed assets which have been created as a result of such expenditure. The above rule of acc .....

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..... if no machinery had been erected. We think that the Appellate Assistant Commissioner meant by this statement only to say that only those items which were not relatable for bringing the asset into existence and to put them into working condition alone will have to be excluded and all the other items will have to be included. That direction still stands and the Tribunal had not modified the same. W .....

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