Capitalization of interest: tribunal scrutinised whether interest and forex on capital projects form capital cost or permit revenue deduction. The tribunal analyzed four core taxation questions: whether interest and foreign exchange fluctuations written off from Capital Work in Progress are ... Summary
Capitalization of interest: tribunal scrutinised whether interest and forex on capital projects form capital cost or permit revenue deduction.
The tribunal analyzed four core taxation questions: whether interest and foreign exchange fluctuations written off from Capital Work in Progress are capital or revenue in nature and their nexus to business operations; whether write off of a DG set component should be treated within the block of assets for depreciation or as a revenue repair; the applicability of Section 36(1)(iii) to proportionate interest on interest free advances to related concerns and the presumption from mixed funds; and the evidentiary requirements to establish that inter corporate deposits were funded from own funds rather than borrowed monies for interest deduction purposes.
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