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Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 against ITAT order for Assessment Year 2001-02 regarding disallowance of interest on investment in capital work-in-progress.
The High Court heard an appeal filed by the Revenue u/s 260A of the Income Tax Act, 1961 against the ITAT order dated 27.3.2007 for the Assessment Year 2001-02. The appeal raised the substantial question of law regarding the deletion of disallowance of Rs. 1,32,57,500/- made on account of interest relatable to investment in capital work-in-progress, despite the requirement of explanation 8 to section 43(1) of the Income Tax Act, 1961. The issue was whether the ITAT was correct in deleting the disallowance. During the proceedings, the counsel for the Revenue highlighted that the issue in this appeal is covered by a Full Bench decision of the Court in a previous case titled "Commissioner of Income Tax-I, Ludhiana Versus M/s. Vardhman Polytex Limited, Chandigarh Road, Ludhiana". However, the counsel for the assessee pointed out that the same question had been considered and decided by the Supreme Court in Deputy Commissioner of Income Tax versus Core Health Care Ltd. (2008) 298 ITR 194 (SC), where the decision was against the Revenue. The Revenue did not contest this legal position. Considering the decision of the Supreme Court where the issue had already been settled, the High Court concluded that no substantial question of law remained to be addressed. Therefore, the appeal was dismissed.
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