Capitalisation of Pre Commencement Interest affirmed as part of asset cost, prompting withdrawal of contrary appeals and guidance. The cost of fixed assets includes all expenditure necessary to bring assets into existence and into working condition; therefore, interest on money borrowed to defray pre production construction or provision of plant and machinery can be capitalised and added to asset cost for computing depreciation and related allowances. The Supreme Court applied established accountancy rules and statutory recognition of capitalisation, and the Board directs withdrawal of pending appeals and circulation of the judgment as guidance to Income Tax Officers.
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Provisions expressly mentioned in the judgment/order text.
Capitalisation of Pre Commencement Interest affirmed as part of asset cost, prompting withdrawal of contrary appeals and guidance.
The cost of fixed assets includes all expenditure necessary to bring assets into existence and into working condition; therefore, interest on money borrowed to defray pre production construction or provision of plant and machinery can be capitalised and added to asset cost for computing depreciation and related allowances. The Supreme Court applied established accountancy rules and statutory recognition of capitalisation, and the Board directs withdrawal of pending appeals and circulation of the judgment as guidance to Income Tax Officers.
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