1999 (6) TMI 18

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....---This court by order dated June 2, 1986, passed an order in I.T.C. No. 20 of 1985, directing the Tribunal to refer the following question for its opinion : "Whether, on the facts and in the circumstances of the case, the interest payable amounting to Rs. 3,97,477 and Rs. 1,04,474 for the assessment years 1976-77 and 1977-78, respectively, by the company is allowable as revenue expenditure ?" ....

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..... on all amounts remaining due from the date of last shipment as shown in article 5(B) of the agreement. The assessee-company accordingly paid the instalments including interest and the interest debited to the profit and loss account for the assessment year 1976-77 was Rs. 3,97,477 and for the assessment year 1977-78 it was Rs. 1,04,474. The Income-tax Officer disallowed the amounts holding that t....

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....for the assessee invited our attention to section 36(1)(iii) which specifically allows interest to be deducted in respect of capital borrowed for the purpose of business or profession and submitted that in the above section, though the supplier of machinery and the financier is one and the same, the assessee had to pay interest on the amount borrowed. Therefore, his case is squarely covered by sec....