2016 (7) TMI 330

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....ntial question of law: Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting disallowance of Rs. 14,09,56,125/- made out of the claims of pre-operative expenses? 2. The assessee during the year made interest payment on the loans taken for expansion of the Steel Project at Mardia Nagar and the new Aluminium Foils and Plexiglass Project which was claimed as pre-operative expense and as revenue expense. The Assessing Officer disallowed the assessee's claim for pre-operative expenses of Rs. 14,09,56,125/-. On appeal the CIT (Appeals) directed the Assessing Officer to consider the claim of the expenditure as revenue expenditure and deleted the addition. On appeal before the ITAT by t....

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....ld as under. "Mr.J.P.Shah, learned counsel appearing for the petitioner has submitted that the issue is squarely concluded by the decision of the Hon'ble Supreme Court in the case of Deputy Commissioner of Income-tax Vs. Core Health Care Ltd., reported in (2008) 298 ITR 194 (SC). He had invited the Court's attention to the ratio laid down by the Hon'ble Supreme Court in the same judgment, which is squarely applicable to the facts of the present case. The Hon'ble Supreme Court in that case has held that Section 36(1)(iii) of the Income-tax Act, 1961 has to be read on its own terms: it is a code by itself. It makes no distinction between money borrowed to acquire a capital asset or a revenue asset. All that the section requir....

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....se. Considering the facts of the present case and the decision of the Hon'ble Supreme Court, we are of the view that the Tribunal was not right in law in disallowing the interest of Rs. 27,96,95,759/- paid in respect of capital borrowed for the purpose of its business being Second Caprolactum Plant under installation. This Tax Appeal is, therefore, allowed. The question formulated by this Court is answered in negative, that is, in favour of the assessee and against the Revenue. " 5. It is submitted that in the aforesaid decision this Court has held that since there was no dispute about the fact that the capital borrowed was used for the purpose of the business, the interest on the borrowed capital was deductible under Section 36(1)(ii....