2002 (12) TMI 44 - HC - Income Tax

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in allowing depreciation on the capitalised amount payable in instalments, in respect of capitalised assets under the deferred payment scheme? - we answer the question of law referred to us in the negative, in favour of the Revenue and against the assessee.

Summary

The High Court of Madras ruled that depreciation cannot be claimed on future interest payable under a deferred payment scheme for capital assets. The court referred to Explanation 8 of section 43(1) of the Income-tax Act, stating that any interest paid in connection with acquiring an asset cannot be included in the actual cost for depreciation purposes. The judgment favored the Revenue and denied the assessee's claim for depreciation on the interest amount.