HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income Tax, Baroda v. Ishwar Bhuvan Hotels Ltd., Baroda
Civil Appeal No. 2594 of 2006
[2008] 2 SCR 652 ·
Income-tax Act, 1961: section 36(1)(iii)
Sources & disclosures includedDownload original judgment / order
2-judge bench · S. H. Kapadia, J. · B. Sudershan Reddy, J.
Assessment years: Not specified in this judgment
01 · Facts of the case
The Department appealed from the Gujarat High Court judgment dated 19 October 2005 in Tax Appeal No. 529 of 2003. The question was whether section 36(1)(iii) permitted deduction of interest on borrowings for capital assets that had not been put to use in the concerned financial year. The short Supreme Court judgment does not state the assessment year, borrowing amount or detailed business facts.
Source: Paragraph 1 and jurisdiction recital; SCR p. 652 / PDF p. 1
02 · Discussion by the Hon’ble Court
The Court held the question squarely covered in the assessee's favour by its decision in Deputy Commissioner of Income Tax, Ahmedabad v. Core Health Care Ltd., Civil Appeal Nos. 3952-3955 of 2002. It supplied no additional independent factual analysis in this companion judgment. The temporal limits of the authority followed must therefore remain visible rather than treating the brief answer as a general deduction rule for all later years.
03 · Judicial decision
The question was answered in favour of the assessee and against the Department. The Department's civil appeal was dismissed, with no order as to costs. Unlike the separate Core Health Care appeal group, this order does not remit any additional questions.
04 · Outcome / in whose favour
In favour of the assessee on the stated interest-deduction question. This separate appeal ended in dismissal of the Revenue's challenge; the mixed procedural result in Core Health Care should not be imported into its disposition.
05 · AKHB REVIEW POINT
AKHB analysis: identify the relevant assessment year and version of section 36(1)(iii) before relying on this companion judgment. Read the authority expressly followed, including its pre-1 April 2004 limitation and existing-business context. Do not infer missing assessment facts, or treat this short order as deciding the later proviso or every pre-use borrowing claim.
Source & verification
Download original judgment / order · Open cited source rendition
Two-page SCR scan; complete judicial paragraphs 1-3 begin on PDF page 1 and conclude on page 2. A separate companion appeal following Core Health Care.
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Statutory scope
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