Unabsorbed interest on borrowings(floating rate
notes - FRN's) taken for infructuous/abandoned capital projects - whether an
allowable expenditure?
Facts:
Assessee had raised FRN for various projects. Part of the
interest on these loans were added to the cost of capital projects/cwip/assets.
On abandoned projects the interest was claimed as an expenditure.
This was disallowed by lower authorities. On higher appeal -
Held in favour of the assessee that interest on
borrowings(floating rate notes - FRN's) taken for infructuous/abandoned capital
projects - were an allowable expenditure.
Applied:
B. Nagi Reddy vs. CIT (1993) 199 ITR 451 (Mad-HC) : 1993
TaxPub(DT) 0184 (Mad-HC)
Chemplast Sanmar vs. ACIT [TCA No. 859 of 2008, dt.
07-08-2018] : 2018 TaxPub(DT) 5613 (Mad-HC)
Dissented:
Eid Parry (India) Ltd. (2002) 257 ITR 253 (Mad-HC) :
2002 TaxPub(DT) 0883 (Mad-HC)
Case: Southern
Petrochemical Industries Corpn. Ltd. v. ITO 2024 TaxPub(DT) 247 (Chny-Trib)