9911796707
TMI Blog1997 (3) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ng unit' was revenue in nature and does not form part of the actual cost of plant and machinery ?" The assessee is a public limited company engaged in manufacture and processing of textiles. The assessment year involved is 1979-80 and the relevant previous year ended on December 31, 1978. The assessee filed a return of income for the assessment year 1979-80 declaring a total income of Rs. 19,08,600. The Inspecting Assistant Commissioner of Income-tax (Assessment), Range-II, Coimbatore, determined the total income of the assessee at Rs. 34,96,070. The assessee during the course of the relevant previous year set up a new textile processing unit and installed certain plant and machinery. The assessee claimed that the deferred interest of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to claim the same as revenue expenditure or as capital expenditure. The Commissioner of Income-tax (Appeals) following the decision of the Bombay High Court in the case of Ballarpur Paper and Straw Board Mills Ltd. v. CIT [1979] 118 ITR 613 held that the assessee had opted to capitalise the interest charges and, therefore, the assessee would be entitled to claim that the amount should be capitalised and the assessee would be entitled to claim depreciation on the interest amount paid on the deferred purchase consideration. The Revenue preferred an appeal before the Income-tax Appellate Tribunal. The Appellate Tribunal following the decision of the Supreme Court in the case of Bombay Steam Navigation Co. (1953) (P.) Ltd. [1965] 56 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to any period after such asset is first put to use, shall not he 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 Act makes it clear that the interest paid on the deferred purchase consideration cannot be included as part of the cost of the asset either for claiming depreciation or for claiming deduction under section 80J of the Act. Hence, on a different reasoning arrived at by us the view of the Appellate Tribunal that the interest paid in connection with the acquisition of an asset cannot be included as part of the actual cost of the asset is justified and is perfectly in order. Hence, it is not necessary for us to go into the question that the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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