COMMISSIONER OF INCOME TAX Vs. HOTEL KRISHNA

JUDGEMENT

(1.) THESE two appeals arise out of a common order, dated 20.12.2000, passed by the Income Tax Appellate Tribunal, Hyderabad Bench A (for short the Tribunal) in I.T.A.Nos.1303/Hyd/1994 and 1304/Hyd/1994. The Tribunal was dealing with the matters pertaining to the assessment years 1989 -90 and 1990 -91 vis - -vis the respondent.

(2.) THE respondent is a hotel establishment and is assessed to tax. In the assessment years 1989 -90 and 1990 -91, it claimed certain benefits under the Income Tax Act, 1961 (for short the Tribunal). The first is about treating a sum of Rs.3,00,000/ - as revenue expenditure. The second is about the exemption from payment of interest on the loan borrowed by it. The Income Tax Officer (I.T.O.) took the view that the amount of Rs.3,00,000/ - spent by the respondent was for construction and that it deserves to be treated as capital expenditure. On the second aspect, the I.T.O. took the view that the respondent, no doubt, borrowed the amount, but has passed on the same to its sister concern and thereby, it is not entitled to deduct the interest paid on the loan. The respondent carried the matter in appeals before the Income Tax Commissioner (Appeals) -I, Hyderabad (for short the Commissioner). The appeals were allowed through order, dated

(3.) IN I.T.T.A.No.119 of 2001, the following questions are framed: