| Case ID |
43fcf43e-fb7c-4c85-9ff2-39f7fc5d3501 |
| Body |
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| Case Number |
IT REFERENCE No. 9 OF 1971 |
| Decision Date |
Feb 05, 1980 |
| Hearing Date |
|
| Decision |
The court held that the interest amount claimed by the assessee, which was shown as a provision for interest accrued on the purchase of property, could not be treated as a deductible revenue expense. The interest was determined to be capital in nature, being part of the overall cost of acquiring the property. As the transfer had not been completed, there was no basis for the claim of interest as a deductible expense in the assessment year 1961-62. The court concluded that any payments made towards the property were capital expenditures, and thus, the claim for deducting the interest amount of Rs. 55,515 was denied. The decision emphasized the nature of the expenses incurred in relation to property acquisition and reinforced the principles governing capital versus revenue expenditures. |
| Summary |
In the case of J.N. Sharma & Sons vs. Commissioner of Income Tax, the Delhi High Court dealt with the issue of whether interest on a property purchase could be claimed as a revenue expense. The assessee, having leased property since 1955 and interested in acquiring it, was informed by the Faridabad Development Board of a potential transfer at a specified cost, including interest. The court found that the interest claimed was inherently linked to the capital cost of the property and not an allowable deduction. This case highlights the distinction between capital and revenue expenditures, particularly in property transactions, and sets a precedent for similar cases in terms of tax implications. Keywords include 'income tax', 'capital expenditure', 'revenue expenditure', 'property acquisition', and 'Delhi High Court decision'. |
| Court |
Delhi High Court
|
| Entities Involved |
Faridabad Development Board,
Ministry of Rehabilitation
|
| Judges |
S. Ranganathan,
D.R. Khanna
|
| Lawyers |
Bishamber Lal,
M. L. Verma,
S. Mukherji
|
| Petitioners |
J.N. Sharma & Sons
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1980 SLD 938,
(1980) 123 ITR 90
|
| Other Citations |
Not available
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
37(1)
|