In the High Court of Punjab and Haryana at Chandigarh Income Tax Appeal No.209 of 2001 Date of Decision:07-01-2009 Commissioner of Income Tax (Central), Ludhiana ---Appellant versus M/s Steel Strips Limited ---Respondent Coram: HON'BLE MR. JUSTICE J.S.KHEHAR HON'BLE MR. JUSTICE NAWAB SINGH Present: Ms. Urvashi Dhugga, Advocate, for the appellant. Mr.Akshay Bhan, Advocate, for the respondent. J.S.Khehar, J.(Oral) During the course of hearing learned counsel for the rival parties are agreed that the deduction available to an assessee under Section 36 (1)(iii) of the Income Tax Act, 1961 in respect of the interest component on capital borrowed is to be determined in consonance with the judgment rendered by the Apex Court in S.A. Builders Ltd. vs. Commissioner of Income-Tax (Appeals) and another (2007) 288 ITR 1 so as to determine the commercial expediency of the assessee, in extending interest free loan. Since the needful had not been done by the Assessing Officer, as also, the Appellate Authorities, learned counsel for the parties are agreed that the orders passed by the Assessing Officer as well as the Appellate Authorities be set aside. Ordered accordingly. Learned counsel for the parties are also agreed that the adjudication of the present controversy be remanded back to the Income Income Tax Appeal No.209 of 2001 -2- Tax Appellate Tribunal, Chandigarh, requiring it to re-adjudicate the issue whether the respondent - assessee is entitled to deduction under Section 36(1)(iii) of the Income Tax Act, 1961, on the interest component in respect of capital borrowed, based on the parameters laid down in S.A.Builders Ltd.'s case(supra), and while doing so, to grant liberty to the rival parties to lead evidence, if they so desire. Accepting the submissions advanced by learned counsel for the parties, the matter is remanded to the Income Tax Appellate Tribunal, Chandigarh. The parties are directed to appear before the Income Tax Appellate Tribunal, Chandigarh on 2.2.2009. In the aforesaid circumstances, the instant appeal is allowed. The impugned orders are set aside to the limited extent of determination of deduction claimed by the respondent-assessee under Section 36(1)(iii) of the Income Tax Act, 1961. (J.S.KHEHAR) JUDGE (NAWAB SINGH) JUDGE January 07, 2009 PARAMJIT