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| The Tax Publishers2020 TaxPub(DT) 3202 (Bang-Trib) : (2020) 185 ITD 0202 INCOME TAX ACT, 1961
Section 36(1)(iii)
Inventory not being capital asset, interest on borrowing used for inventory was duly allowable under section 36(1)(iii) though same stood in contradiction with Accounting Standard whether AS 16 or AS 2 or any other AS.
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Business deduction under section 36(1)(iii) - Interest on borrowed capital - Borrowed funds used for acquisition of inventory - AO made disallowance in view of AS-2 and AS-16 issued by ICAI
Assessee claimed deduction under section 36(1)(iii). AO noticed that borrowed funds were used for acquisition of land which was inventory in assessee's case. AO referred to AS-2 and AS-16 issued by ICAI and concluded that interest cost was not allowable and it was to be added with cost of inventory. Held: When provisions of the Act are in contradiction with Accounting Standard whether AS 16 or AS 2 or any other AS, provisions of Act would apply, and not the provisions of AS. Accordingly, inventory not being capital asset, interest on borrowing used for inventory was duly allowable under section 36(1)(iii).
Followed:DLF Ltd. v. Addl. CIT TS-5387-ITAT-2016-Delhi : 2019 TaxPub(DT) 4534 (Del-Trib)
REFERRED :
FAVOUR :
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 14A
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