In Commissioner of Income Tax v. M/s Joy Alukkas Traders (India) Pvt Ltd, a division bench of the Kerala High Court held that interest paid on money borrowed to bring into existence a show room is a revenue expenditure under the provisions of the Income Tax Act, 1961.
A bench comprising Justices Antony Dominic and Dama seshadri Naidu was hearing a departmental appeal wherein the appellants challenged the order of the Income Tax Appellate Tribunal.
According to the revenue, the above income constitutes an income earning apparatus, and therefore, the expenditure should treated as ‘capital’ in nature.
The bench noticed an earlier decision wherein the Court held that the expenditure incurred by the assessee is revenue expenditure.
Following the decision, the bench answered the questions of law in favour of the assessee.
Read the full text of the Judgment below.
