ADDITIONAL COMMISSIONER OF INCOME TAX Vs. SOUTHERN FOUNDERS

JUDGEMENT

(1.) THE question referred to us under s. 256(1) of the I.T. Act, 1961 (hereinafter referred to as the Act), in the above case reads :

(2.) THE assessee claimed during the relevant assessment year the interest paid on amounts borrowed by it for purpose of putting up additional buildings. THE ITO and the AAC held that the interest paid on such borrowings would not be deductible as revenue expenditure on the ground that the additional building constructed by the assessee had not yet been put to use. In the appeal filed by the assessee before the Tribunal, the orders passed by the authorities under the Act were set aside and the claim made by the assessee was allowed. Hence, this reference at the instance of the department.