1997 (3) TMI 23

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.... machinery installed in 'textiles processing unit' was revenue in nature and does not form part of the actual cost of plant and machinery ?" The assessee is a public limited company engaged in manufacture and processing of textiles. The assessment year involved is 1979-80 and the relevant previous year ended on December 31, 1978. The assessee filed a return of income for the assessment year 1979-80 declaring a total income of Rs. 19,08,600. The Inspecting Assistant Commissioner of Income-tax (Assessment), Range-II, Coimbatore, determined the total income of the assessee at Rs. 34,96,070. The assessee during the course of the relevant previous year set up a new textile processing unit and installed certain plant and machinery. The assesse....

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....apitalised and it is at the option of the assessee to claim the same as revenue expenditure or as capital expenditure. The Commissioner of Income-tax (Appeals) following the decision of the Bombay High Court in the case of Ballarpur Paper and Straw Board Mills Ltd. v. CIT [1979] 118 ITR 613 held that the assessee had opted to capitalise the interest charges and, therefore, the assessee would be entitled to claim that the amount should be capitalised and the assessee would be entitled to claim depreciation on the interest amount paid on the deferred purchase consideration. The Revenue preferred an appeal before the Income-tax Appellate Tribunal. The Appellate Tribunal following the decision of the Supreme Court in the case of Bombay Steam....