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Case Law Details

Case Name : Ashima Dyecot Limited Vs DCIT (ITAT Ahmedabad)
Appeal Number : Income tax (Appeal) nos.14, 58 and 59 of 2012
Date of Judgement/Order : 09/06/2015
Related Assessment Year :
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Brief of the Case

ITAT Ahmedabad held In the case of Ashima Dyecot Limited vs. DCIT that interest on capital borrowed for plant & machinery which already has put to use for commercial production is allowed u/s 36 (1) (iii). In the given case, it is presumed that the assessee has put to use its plant and machinery and the assessee has already started its commercial production on 23.9.1996. Therefore, we held it entitled for deduction of sum incurred on capital borrowed for purpose of the business.

 Facts of the Case

The assessee started its commercial production on 23.9.96 and continued to make heavy additions during October to March 1997 of Rs. 38, 38, 78,342/-. The assessee also shown capital work in progress as on 31.3.1997 of Rs.16,01,69,517/-. This total sum reads almost Rs.54 crores. The assessing officer quoted alleged failure in producing details of the above said outgo and substantive addition in its plant and machinery even after its commercial production had started with usage of borrowed fund to invoke section 36(1)(iii). Accordingly, a disallowance of Rs.1,97,32,000 on account of interest was made by the AO.

Contention of the Assessee

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