Assessee purchased a piece of land from Gujarat Industrial Development Corporation. Assessee was required to make part payment for purchase of land in 12 quarterly instalments along with interest at rate of 12.5 per cent.  Assessee treated amount of balance payment as loan in its books of account on which interest was incurred. Assessing Officer worked out amount of interest pertaining to such acquisition of land and added same to total income of assessee. On appeal the CIT (A) held that interest directly related to capital assets being land and therefore same had to be capitalized. On appeal the Tribunal held that as per Explanation 8 to section 43(1) entire interest cost if incurred in connection with capital asset has to be capitalized. Therefore, where interest cost was incurred by assessee with respect to capital asset being land which was not put to use in year under consideration, it could not have been allowed as revenue expenditure. (AY. 2004-05 & 2011-12)