The Commissioner Of Income Tax – 2, Mumbai v. Tata Ssl Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.492 OF 2011 The Commissioner of Income Tax – 2, Mumbai Versus ..Appellant. Tata SSL Limited..Respondent. Mr.Vimal Gupta, Senior Advocate with Ms.Padma Divakar for the appellant.Mr.Ajay Singh i/by Mr.Srihari M. Iyer for the respondent. P.C. : CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 30[th] October 2012 1.The question of law raised by the Revenue in this appeal, reads thus : “Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the disallowance of Rs.1,61,82,442/- made by the Assessing Officer being interest paid on loans raised specifically to set up a new unit at Sisodra and for modernization of the wire rod mill plant even though the provisions of Explanation 8 to Section 43(1) state that such expenditure will constitute part of the actual cost of the assets and also the fact that the Assessee Company had itself capitalized the said expenditure in its Books of Account ?” 2.The Apex Court in the case of Deputy Commissioner of Income- tax V/s. Core Health Care Limited reported in (2008) 298 ITR 194 (SC) has held that interest paid by the assessee in respect of the borrowings which are in connection with the existing business of the assessee are allowable. In the present case, the Income Tax Appellate Tribunal following its decision in the case of the assessee for AY 1996-1997 has recorded a finding that there was existing business of the assessee. 3.In this view of the matter, no fault can be found with the decision of the Income Tax Appellate Tribunal in allowing the claim of the assessee by following the decision of the Apex Court in the case of Core Health Care Limited (supra). 4.In this view of the matter, we see no merit in the appeal and the same is hereby dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)