Supreme Court Judgments — 1999

The Supreme Court held that the appeal by the Revenue had no merit and dismissed it. The Court found the reasoning of the Tribunal to be correct. The principle established is that even if machinery purchased for the purpose of business has not been actually used at the time of assessment, but is treated as a business asset, the interest paid on the amount borrowed for its purchase is a deductible expenditure. The Court reasoned that the machinery was purchased solely for the purposes of the business, and therefore, the interest incurred on the borrowed funds constituted a business expense. Consequently, the Tribunal's view that the interest was an allowable deduction was upheld. No issue was expressly left undecided.