A.C.Sen, J. - (1.) This is a reference under Section 66(1) of the Indian Income Tax Act, 1922. The following question has been referred to us for our decision. "Whether on the facts and in the circumstances of the case, the assessee was entitled under the provisions of Sections 10(2)(vi), 10(2)(vi-a) and 10(2)(vi-b) read with Section 10(5) of the Indian Income Tax Act to treat the sum of Rs. 23,53,284 being the amount of interest paid on monies borrowed as part of the actual cost for the purposes of depreciation allowances and development rebate?"
(2.) Facts relevant to the question referred are as follows.
(3.) The assessee-company was incorporated on 5th July 1952 and commenced its business from September, 1954. In June 1953, it borrowed rupees four crores on debentures at the rate of 51/4% interest from the public, the interest to run from June. 1953. This sum together with rupees twelve crores financed by the company were used in setting up the refinery for which plant and machinery were imported from abroad. The refinery started work on the 1st September, 1954, from which date depreciation began to be calculated.;