COMMISSIONER OF INCOME TAX Vs. HINDUSTAN ZINC LTD

JUDGEMENT

(1.) THIS appeal is directed against the order of the Tribunal dt. 28th April, 1999. The limited controversy before this Court is whether the Tribunal was justified in allowing the interest amounting to Rs. 18,56,32,417 as revenue expenditure, on the funds borrowed to the tune of Rs. 220 crores ?

(2.) THE case of the respondent-assessee before the AO was that the interest paid on the capital borrowed for expansion of business is allowable under s. 36(1)(iii) of the Act. That prayer was rejected, holding that as the assets were not put in use, the amount of interest cannot be allowed as revenue expenditure.

(3.) CONSIDERING the view taken by their Lordships in Veecumsee's case (supra) and the proviso inserted under cl. (iii) of sub-s. (1) of s. 36 of the Act w.e.f. 1st April, 2004, we find no infirmity in the order of the Tribunal.