ASSISTANT COMMISSIONER OF INCOME TAX, AHMEDABADversusARVIND POLYCOT LTD.

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                              (2008) 2 S.C.R. 650

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    A        ASSISTANT COMMISSIONER OF INCOME TAX,
                                                                           _...,,      .
                          AHMEDABAD
                                      'II.
                          A~VIND POLYCOT LTD.
                      (Civil Appeal No. 1182 of 2008)
    B                       FEBRUARY 8, 2008
           [S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.]                     J..


             Income Tax Act, 1961 - s.36(i)(iii) - Interest paid in
        respect of borrowings on capital assets not put to use in the
    c   concerned financial year - Held : Is allowable deduction.
          The question which arose of consideration in the
      present appeal is : Whether interest paid in respect of
      borrowings on capital assets not put to use in the
      concerned financial year can be permitted as allowable
    D
      deduction under Section 36(1) (iii) of the Income-Tax Act,
                                                                                A
      1961?
                                                                                  ·~
             Dismissing the appeal, the Court
            ·HELD: Interest paid in respect of borrowings on
    E
        capital assets not put to use in the concerned financial
        year is allowable deduction under s.36(1 )(iii) of the
                                                                                       -:
        Income-Tax Act, 1961. [Para 2] [651-8, C]
             Dy. Commnr. of Income Tax, Ahmedabad v. Mis. Core
    F   Health Care Ltd. 2008(2) Scale 327 - relied on.                         )..

             CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1182
        of 2008.
           From the Judgment and Order dated 19.10.2005 of the
    G High Court of judicature of Gujarat atAhmedabad in Tax Appeal
      No. 526 of 2003.                                                          ,,.,
             P. Vishwanatha Shetty, T. Srinivasa Murthy, Gaurav Agrawal
        and B.V. Balaram Das for the Appellant.

    H                                650
        ASSISTANT COMMISSIONER OF INCOME TAX,                       651,
      AHMEDABAD v. ARVIND POLYCOT LTD. [KAPADIA, J.]

           S. Ganesh, Amar Dave, Rustom B. Hathikhanawala, E.C.                    A
      Agrawala. J.P. Shah, Manish Shah, Harish J. Jhaveri, Pardiwala,
      Jay Savla and Reena Bagga for the Respondent.
             The Judgment of the Court was delivered by
             KAPADIA, J. 1. Leave granted.                                         B
            2. In this civil appeal filed by the Department the question
      of law arises for determination which question is as follows:
             "Whether interest paid in respect of borrowings on capital
             assets not put to use in the concerned financial year can     1       c
             be permitted as allowable deduction under Section
             36(1 )(iii) of the Income-tax Act, 1961 ?"
           3. Our answer to the above-mentioned question is squarely '
      covered by our decision in favour of the assessee and against
      the Department in the case of Dy. Commr. of Income Tax, D
      Ahmedabad v. Mis. Core Health Care Ltd. in Civil Appeal ,
      Nos.3952-55 of 2002.
...       4. Accordingly the said question is answered in favour of
      assessee and against the Department. Consequently the •
      Department's civil appeal is dismissed with no order as to costs. E
      D.G.                                         Appeal dismissed.           1