COMMISSIONER OF INCOME TAX Vs. KAYAL SYNTEX LTD.

JUDGEMENT

(1.) By way of these appeals, the appellant-revenue has challenged the judgment and order dated 18.02.2005 passed by the Income-tax Appellate Tribunal, Ahmedabad Bench 'B' in ITA No. 2723/Ahd/2000 and 2724/Ahd/2000 for the assessment years 1996-97 and 1997-98.

(2.) These matters were admitted by this Court for consideration of the substantial question of law as to whether the Appellate Tribunal was right in law and on facts in upholding the addition on account of revenue expenditure capital in nature under Section 37 of the Income Tax Act, 1961.

(3.) The assessee had claimed expenditure of Rs. 37,04,458/- as revenue expenditure. During the course of assessment proceedings, the A.O observed that the said expenditure was towards acquisition of a capital expenditure and therefore not entitled to deducted as revenue expenditure. On appeal the CIT (Appeals) deleted the addition to the extent of the said amount and sustained the remaining addition. On further appeal, the Tribunal upheld the decision of CIT(A) with regard to interest payment to the tune of Rs. 37,04,458/- and deleted the remaining addition.