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<h1>High Court affirms Tribunal on financial charges treatment, distinguishing revenue vs. capital expenditure. Loan charges deductible under</h1> The High Court upheld the Tribunal's decision regarding the treatment of financial charges for new projects under construction as allowable business ... - Issues involved: Interpretation of revenue and capital expenditure, disallowance of expenses, treatment of interest under section 36(1)(3) of the Income Tax Act.Interpretation of revenue and capital expenditure: The High Court addressed five questions of law raised by the revenue. The first four questions regarding the treatment of project expenses, legal expenses, foreign travel expenses, and interest disallowance were not entertained as similar questions in the assessee's own case were not admitted previously. However, the Court examined the fifth question concerning financial charges for new projects under construction. The Tribunal had deemed these charges as allowable business expenditure since they were incurred in obtaining a loan during the course of business. The Court upheld the Tribunal's decision on this matter, dismissing the appeal.Disallowance of expenses: The Court specifically focused on the disallowance of certain expenses, including project expenses, legal expenses, foreign travel expenses, and interest disallowance under section 36(1)(3) of the Income Tax Act. While the first four questions were not entertained due to previous rulings, the Court upheld the Tribunal's decision on allowing financial charges as business expenditure, emphasizing that they were incurred in the normal course of business.Treatment of interest under section 36(1)(3) of the Income Tax Act: The Court's decision highlighted the importance of distinguishing between revenue and capital expenditure. It noted that the financial charges in question were paid to a bank for obtaining a loan during business operations, making them eligible for deduction as business expenditure. By affirming the Tribunal's ruling on this issue, the Court emphasized the legitimate nature of the financial charges and their relevance to the business activities, ultimately leading to the dismissal of the appeal.
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