The Tribunal held that order of CIT(A) restricted the disallowance holding that as the installation report showed the installation date of the machinery to be a month earlier than that taken by the Assessing Officer, the disallowance of interest expense should be limited to that extent only. Moreover, as the assessee had utilised its own funds, in addition to funds borrowed from the bank, for the purchase of the machinery, the Commissioner (Appeals) excluded the amount of own funds in reckoning the interest expenses to be capitalized is held to be justified. (AY.2008-09)
ITO v.
Rajkalp Mudraalaya Pvt. Ltd. (2020) 84 ITR 4 (SN.) (Ahd.) (Trib.)
S. 36(1)(iii) : Interest on borrowed capital-Capitalisation of interest paid up to date of installation of machinery-Interest relating to assessee’s own funds utilised in purchase to be excluded in computing the interest to be capitalized.