TaxTMI 
TaxTMI 
2011 (4) TMI 386
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....al questions of law have been claimed for determination of this Court : (a) Whether on the facts and circumstances of the case, the Tribunal acted illegally and perversely, in holding that the interest of Rs. 9,05,976 paid by the appellant on Term Loan raised for acquiring asset in its existing business is disallowable in view of proviso to section 36(1)(iii) of the Act? (b) Whether on the facts and circumstances of the case, the Tribunal acted perversely in interpreting the words 'Expansion and Extension' as synonymous in spite of the fact these two words have been used in the different sections separately and carry different meaning? (c) Whether on the facts and circumstances of the case, the T....
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....assessee on the borrowings made for purchase of the machinery in the facts of the present case was hit by the proviso to section 36(1)(iii) of the Act and was inadmissible revenue expense. 9. Learned counsel for the assessee submitted that there was no extension of business and, therefore, the proviso to section 36(1)(iii) did not apply. According to the learned counsel, it was only an expansion in business which had taken place and the same was not covered within the term 'extension'. Learned counsel argued that in section 36(1)(iii) the word extension has been used whereas sections 80-IC(8)(ix) and 80-IE(7)(iii) contain the word expansion. Further the expression restructuring and reconstruction has been stated in section 80-ID(3)(i), 8....
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....ties which fulfil such conditions as may be prescribed, shall be deemed to be capital borrowed within the meaning of this clause;" 11. The effect of proviso to section 36(1)(iii) inserted by the Finance Act, 2003 w.e.f. 1-4-2004 relating to assessment year 2004-05 and subsequent years is to disallow interest on moneys borrowed for acquiring a capital asset till the date on which the asset was brought to use even if it is for extension of existing business. 12. After considering the issue, we do not find any substance in the contention of the learned counsel. It would at the first place be quite apt to have a glimpse of the dictionary meanings of the two words. According to Chambers 21st Century Dictionary, the meaning of word Extensio....
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....report, the managing director talks about the changing global textile scenario, and the role of capacities and up-gradation of technology in the success of business which was the instrument for increasing the spindle capacity which, in turn, was to be financed by the term loan raised by the assessee-company during the year. In the facts before the Hon'ble Delhi High Court in Modi Industries Ltd.'s case (supra) relied upon by the assessee, person was engaged in the business of manufacture of diverse items and a new item was added to its manufacturing business, whereas there was complete unity or control and utilisation of common funds and it was held that the business of manufacturing of new items was an extension of the business and not a n....