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February 12, 2008 (Date of publication) |
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(i) Interest paid in respect of borrowings on capital assets not put to use in the concerned financial year are deductible under Section 36(1)(iii) of the Act;
(ii) Interest on all moneys borrowed for the purposes of business are deductible irrespective of whether the moneys are used for a revenue purpose or a capital purpose;
(iii) Explanation 8 to s. 43(1) has no application to s. 36(1)(iii);
(iv) The proviso to s. 36(1)(iii) operates prospectively;
(v) Challapalli Sugars 98 ITR 167 (SC) applies to a case where the business had not yet commenced.
Note: The judgement of the Full Bench in CIT vs. Vardhaman Polytex (P & H High Court) is impliedly overruled.
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