On Revenue’s appeal, the Tribunal held that only one unit commenced in the preceding year and the other unit was set up and commenced in the current year. Accordingly, in view of proviso to S. 36(1)(iii) of the Act, only those assets which were put to use in the current year were to be considered was operational in nature and only to that extent interest on borrowed capital for acquisition of assets was to be allowed as a deduction. (ITA No. 3002/Del/2011) (AY. 2005-06)
ACIT v. Pasadensa Foods Ltd. (2018) 163 DTR 243 (Delhi)( Trib.)
S. 36(1)(iii) : Interest on borrowed capital – Capital was borrowed for acquisition of fixed assets and only a part of assets were put to use- Interest was to be allowed only to the extent the assets were operational during the current year.