1994 (1) TMI 25

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....s as follows: The assessee is a company. In the previous year relevant to the assessment year 1976-77, the assessee purchased a house property called "West Side House" on August 29, 1969, for a sum of Rs. 9,07,509. The funds for the purchase came as a loan from a bank. The assessee claimed deduction of interest paid on the borrowed funds. The Income-tax Officer disallowed the deduction on the g....

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....e Revenue, the following question has been referred: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was entitled to the deduction of interest on loan taken from the bank for the purchase of the property 'West Side House' especially when the property was neither acquired for the purpose of the assessee's business nor use....

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....he application of the borrowed funds to claim that, for the previous year, since the building was not in actual use, it can be considered only as an investment and, therefore, since the borrowed fund was utilised only for capital outlay, the interest could not be allowed as a business expenditure. This argument is unsustainable in view of the decision of the Supreme Court in India Cements Ltd. v. ....