2016 (7) TMI 963

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....r passed by the CIT (A) deleting the disallowance of Rs. 36,30,000/- made u/s 36(1)(iii) out of preoperative expenses ? 3. Learned Counsel for the assessee has submitted that the question raised in this appeal is squarely covered by a decision case of Deputy Commissioner of Incom-tax v. Core Health Care Ltd. [2008] 167 TAXMAN 206 (SC) and placed reliance upon the following paragraphs: "13. In our view the above observations have to be confined to the facts in the case of Challapalli Sugars Ltd. (supra). It was a case where the company had not yet started production when it borrowed the amount in question. The more appropriate decision applicable to the present case would be the judgment of this court in the case of India Cements Ltd. v. C....

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....unning business, while the decision of the Supreme Court in Challapalli Sugars Ltd. (supra) was given with reference to the borrowings which could not be treated as made for the purposes of business as no business had commenced in that case. Therefore, there is no inconsistency between the above decisions. CONCLUSIONS 14. For the above reasons, we hold that A.O. was not justified in making disallowance of Rs. 1,56,76,000/- in respect of borrowings utilized for purchase of machines. Accordingly, the above question is answered in favour of the assessee and against the Department. 15. Apart from the above question under Section 36(1) (iii), the present civil appeals are filed by the Department against the decision of the High Court where....