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TMI Blog1998 (11) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner as it is in the nature of interest on borrowing for acquiring the machinery and it will be allowed in the year in which it was payable. On appeal, the Commissioner held that the assessee had already commenced production in the earlier year and interest payable was allowable as revenue expenditure in the same manner as guarantee commission paid on deferred payment was allowed as revenue expenditure by this court in the case of Sivakami Mills Ltd. v. CIT [1979] 120 ITR 211. On further appeal, the Tribunal followed the decision of the Bombay High Court in the case of Ballarpur Paper and Straw Board Mills Ltd. v. CIT [1979] 118 ITR 613 and allowed the assessee's appeal. On that, the reference has arisen at the instance of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1961, Which came into effect from April 1, 1974, was added with the object of removing doubts with regard to the includibility of interest relatable to any period after the asset is first put to use in the production in its actual cost. Explanation 8 to section 43(1) reads as follows: "For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset." Explanation 8 to section 43(1) of the Income-tax Act was inserted by section 9 of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1974, shows that it was added with the object of removing doubts with regard to the includibility of interest relatable to any period after the asset has first been put to use, in the computation of its actual cost. By this Explanation, it has been declared by Parliament that 'where any amount is paid or is payable as interest' in connection with the acquisition of an asset 'so much of such amount as is relatable to any period after such asset is first put to use shall not be included and shall be deemed never to have been included,' in the actual cost of such assets. Parliament, in the above Explanation, has taken full care to couch the Explanation in the widest possible terms to avoid any further controversy in regard to the very same iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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