TaxTMI 
TaxTMI 
2013 (7) TMI 336
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....t year 2000-01. On 18.05.2010, the Department has moved an application (M.A. No. 55321 of 2010), where a prayer was made by the Department to amend the memo of appeal, which was wrongly pasted, and the same is allowed. The brief facts of the case are that the assessee is a public limited company engaged in the business of manufacturing of asbestos sheet and allied products. Original assessment was made on 07.01.2003, which was finally assailed before the Tribunal and the Tribunal vide its order dated 22.07.2005 has remanded the matter back to the Assessing Officer (AO) to examine the issue pertaining to allowability of the interest. The AO has reiterated its earlier order, which was affirmed by the first appellate authority, but the T....
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....ank failed to bifurcate the interest on the different loans taken by the assessee. The depreciation was already allowed on the fixed assets by the AO. The assessee has wrongly claimed the expansion as a revenue expenditure, as the same was capitalized expenditure. The assessee is entitled only for depreciation. Lastly, he justified the order passed by the AO. On the other hand, Sri S.K. Garg, learned counsel for the assessee justified the Tribunal's order. He submits that there was an expansion of the existing business. There was common management, finance and production of the existing business. There was complete unity, control and management, interlacing of funds were unrebuted. The capital was borrowed for the purpose of business and....
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....nsion of existing business or profession (whether capitalized in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. Explanation.-Recurring subscriptions paid periodically by shareholders, or subscribers in Mutual Benefit Societies which fulfill such conditions as may be prescribed, shall be deemed to be capital borrowed within the meaning of this clause." Needless to mention that the test to discriminate between a capital and a revenue expenditure is not straight. An item of expenditure tough incurred wholly and exclusively for the purpose of the business may nevert....
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....n the business and which could be spent by the assessee on any account, either capital or revenue. The aforesaid Section 36(1)(iii) provides that the amount of interest paid in respect of capital borrowed for the purpose of the business could be covered under Section 36 for deduction. Similar views were expressed in the case of Indo Rama Synthetics India Ltd. vs. CIT, (2011) 333 ITR 18 (Del), where the earlier ratio laid down in the case of CIT vs. Monnet Industries Ltd., (2011) 332 ITR 627 (Del) was followed by observing that the interest borrowed on capital as business expenditure is allowable when the amount was borrowed for setting up a new plant. In that case, the assessee was already in the business of ferro alloys plant and it had....