Search Results Page
Search Results
1 - 10 of 13 (0.22 seconds)Calico Dyeing And Printing Works vs Commissioner Of Income-Tax, Bombay ... on 25 February, 1965
In Calico Dyeing and Printing Works v. CIT (supra), it was held that if the capital is used in the year of account and the use is for the purpose of the business of the assessee, it is immaterial whether the user of the capital actually yielded profit or not and it is not open to the department to reject the claim of the assessee in respect of the interest paid on that capital merely because the use of the capital is unremunerative.
Prem Spinning And Weaving Mills Company ... vs Commissioner Of Income-Tax on 1 February, 1974
Sec. 36(1)(iii) provides for deduction to be allowed in computation of income referred to in s. 28, of the amount of interest paid in respect of capital borrowed for the purpose of business or profession. Admittedly, amongst others, the assessee is carrying on the business of running a rice and dal mill and husk is the waste product of the mill, which can be utilised as raw material for manufacturing straw boards. That is the reason for which the assessee decided to start a straw board factory to utilise the waste material of the mill as a raw material for manufacturing straw boards. For this purpose, the assessee borrowed capital from the M.P. State Finance Corporation and started constructing, erecting and installing the straw board factory. In fact, this is only expansion of the existing business of the assessee and it is not a case of starting altogether a new business for that purpose. Therefore, the assessee is entitled to deduct interest paid under s. 36(1)(iii) of the Act from the total income. We are fortified in our view by a direct decision of the Allahabad High Court in Prem Spinning and Weaving Mills Co. Ltd. v. CIT (1975) 98 ITR 20 (All) the facts of which were more or less similar to the facts of the present case. There, the assessee company was running a spinning and weaving mill and had set up a straw board manufacturing factory and for that purpose took a loan form the U.P. Financial Corporation. The assessee claimed deduction for the interest paid towards the loan, but the same was disallowed by the Tribunal holding that the straw board factory was altogether a fresh undertaking with the help of surplus funds and also of borrowed fund and could not be identified with the existing business and the business for which capital was borrowed had not yet started production. It was held :
Ram Kishan Oil Mills vs Commissioner Of Income-Tax, U. P. on 21 April, 1964
Similar view has been taken by this Court in Ram Kishan Oil Mills v. CIT (1965) 56 ITR 186 (MP) that when the ITO finds that the borrowing transaction was not illusory or colourable and that the capital was borrowed by the assessee for the purposes of the business and the amount of interest was paid, then the claim made by the assessee for deduction on account of the interest paid on borrowed capital has to be allowed.
State Of Madras vs C. J. Coelho on 30 April, 1964
The Supreme Court, in State of Madras v. G. J. Coelho (1964) 53 ITR 186 (SC), has held that there is no distinction between interest paid on capital borrowed for the acquisition of a plantation and interest paid on capital borrowed for the purpose of an existing plantation. Both are for the purposes of the plantation.
Challapalli Sugar Ltd vs The Commissioner Of Income Tax, A.P. ... on 31 October, 1974
In Challapalli Sugars Ltd. v. CIT (1975) 98 ITR 167 (SC), the Supreme Court held that in case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalised and added to the cost of fixed assets created as a result of such expenditure. This was a case of a new factory being set up and not expansion of the existing business.
Commissioner Of Income-Tax vs Travancore-Cochin Chemicals Ltd. on 12 September, 1974
10. A Full Bench of the Kerala High Court in CIT v. Travancore-Cochin Chemicals Ltd. (1975) 99 ITR 24 (Ker) (FB) also held that interest paid on borrowed capital till the building, plant or machinery is erected or constructed is part of the actual cost of the project within the meaning of s. 33 read with s. 43 of the IT Act, 1961, for the purposes of development rebate claimed by the assessee. Again, this was a case of a new factory being set up for the first time.
Commissioner Of Income-Tax vs L.G. Balakrishnan And Bros. (P.) Ltd. on 15 September, 1973
11. Similar is the view taken by the Madras High Court in CIT v. L. G. Balkrishnan & Bros. (P) Ltd. (1974) 95 ITR 284 (Mad) holding that the interest paid on the amount borrowed for the purpose of machinery had rightly been capitalised as part of the cost of the machinery and the Tribunal was right in allowing the assessees claim for depreciation and development rebate on this amount also. This was also a case of starting a new business.