9911796707
|
Home
Issues:
1. Deductibility of interest payable on compensation due to foreign owners of nationalized transport undertakings. 2. Classification of buildings located in bus termini for depreciation purposes. Analysis: 1. The judgment pertains to an application filed by the Revenue under section 256(2) of the Income-tax Act, 1961, seeking a direction to the Income-tax Appellate Tribunal regarding the deductibility of interest on compensation due to foreign owners of nationalized transport undertakings. The assessee, a Government-owned transport corporation, claimed a deduction of interest paid on the compensation. The Income-tax Officer disallowed the claim, stating the interest was capital in nature. However, the Commissioner of Income-tax (Appeals) allowed the deduction, emphasizing that the liability to pay interest arose under the Nationalisation Ordinance. The Tribunal concurred with the Commissioner's view, considering the interest as a revenue expenditure incurred after the business inception. The court upheld the Tribunal's decision, highlighting that paying compensation in instalments ensured financial stability for the corporation to run its transport business effectively. 2. The second issue revolved around the classification of buildings located in bus termini for depreciation purposes. The assessee claimed depreciation at 10% on these buildings, asserting they were factory buildings. The Income-tax Officer denied the claim, contending the buildings were not factory buildings. However, the Commissioner of Income-tax (Appeals) allowed the depreciation, stating that the registration of buildings as factory buildings under the Factories Act was sufficient proof of their use as workshops, even though they were also used for parking buses. The Tribunal agreed with this view, emphasizing that the buildings, used for minor repairs alongside parking, qualified as workshops or factories. The court supported the Tribunal's decision, citing that regular and extensive repairs conducted in the buildings justified their classification as workshops, despite being used for parking buses as well. In conclusion, the court dismissed the Revenue's application, stating there was no justification for referring the questions raised. The judgment upheld the Tribunal's decisions on both issues, emphasizing the rationale behind allowing the interest deduction and classifying the buildings as factory buildings for depreciation purposes.
|
