COMMISSIONER OF INCOME TAX Vs. KASTHURI AND SONS

JUDGEMENT

(1.) THE question referred to us at the instance of the Revenue is as to whether the Tribunal was right in holding and had valid materials to hold that the interest on the amount borrowed for its Hyderabad facsimile project should be treated as a revenue expenditure and allowed as a deduction in computing the income of the assessee." THE assessment year is 1977-78.

(2.) THE assessee is a publisher of the Hindu newspaper. It has been carrying on business for several decades. It established a printing fascimile unit at Hyderabad for printing its paper locally so that despatch to that destination from Madras which involved delay could be avoided. THE assessee borrowed monies for the purpose of setting up that unit and though it had capitalised the interest paid on such borrowings in its accounts by way of an adjustment statement, it claimed the interest as revenue expenditure. That claim was disallowed by the Income-tax Officer, but was allowed by the Commissioner and such allowance was affirmed by the Tribunal.