Commissioner of Income Tax, Meerut vs Prem Heavy Engg. Works (P.) Ltd.

R.K. Agrawal, J.—The present appeal filed u/s 260A of the income tax Act, 1961 has been admitted vide order dated 30-1-2001 on the following substantial question of law:-

"Whether on the facts and the circumstances of the case, the Tribunal was legally correct in confirming the order of the Commissioner of income tax (Appeals) in deleting the addition of Rs. 3,65,430 on account of interest paid to the bank of the assessee, in respect of assessment year 1987-88?"

We have heard Sri A.N. Mahajan, Standing Counsel for the revenue, and Sri Rakesh Ranjan Agrawal, learned counsel appearing for the respondent assessee.

It is agreed between the parties that similar issue for the assessment year 1984-85 came up before this Court in the case of CIT v. Prem Heavy Engineering Works (P.) Ltd. [2006] 285 ITR 554 1, which is inter parties, and this Court has answered the question in favour of the assessee and against the revenue. Moreover, we find that the Apex Court in the case of S.A. Builders Ltd. v. CIT [2007] 288 ITR 1 2, has held that the deductions of interest on borrowed capital has to be made if it has been done as a measure of commercial expediency from the view point of tax payer. In view of the aforesaid observation, the appeal is dismissed.