Judgment :- RANGARAJAN J. The brief facts leading to these references as follows The assessee is a company. In the previous year relevant to the assessment year 1976-77, the assessee purchased a house property called "West Side House" on August 29, 1969, for a sum of Rs. 9, 07, 509. The funds for the purchase came as a loan from a bank. The assessee claimed deduction of interest paid on the borrowed funds. The Income-tax Officer disallowed the deduction on the ground that the property was neither used for the purpose of business nor let out during the previous year. This was confirmed on appeal. On further appeal, the Appellate Tribunal found that one of the businesses of the company was investment in house property and, therefore, the purchase was part of the assessee's business. The Appellate Tribunal also found that after the purchase, the property was remodelled and in the next year two-thirds were let out to Messrs. Wheels India Limited and one-third was used for the company's business as office premises. The Appellate Tribunal came to the finding that the money borrowed for the purchase of the property was only for the purpose of business and, accordingly, allowed the deduction of the interest on the money borrowed At the instance of the Revenue, the following question has been referred "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was entitled to the deduction of interest on loan taken from the bank for the purchase of the property 'West Side House' especially when the property was neither acquired for the purpose of the assessee's business nor used during the accounting year for business purposes?"* At the outset, we may mention that the latter part of the question states the objection taken by the Income-tax Officer rather than the finding given by the Appellate Tribunal. The objection of the Income-tax Officer having been overruled by the Tribunal that cannot be the basis for a question to be referred under section 256 of the Income-tax Act. Once we substitute the finding of the Appellate Tribunal that the acquisition of the property was only for the purpose of the business of the assessee-company in the question referred, our answer has to be in the affirmative and against the Revenue. The Revenue has not challenged that finding of fact specifically. Once we substitute the finding of the Appellate Tribunal that the acquisition of the property was only for the purpose of the business of the assessee-company in the question referred, our answer has to be in the affirmative and against the Revenue. The Revenue has not challenged that finding of fact specifically. Learned counsel for the Revenue sought to make a distinction with regard to the application of the borrowed funds to claim that, for the previous year, since the building was not in actual use, it can be considered only as an investment and, therefore, since the borrowed fund was utilised only for capital outlay, the interest could not be allowed as a business expenditure. This argument is unsustainable in view of the decision of the Supreme Court in India Cements Ltd. v. CIT, that expenditure incurred for raising a loan is allowable as a business expenditure on revenue account irrespective of whether the funds are borrowed for capital outlay or for revenue disbursement. In the circumstances, we agree with the Appellate Tribunal that the capital borrowed was only for the purpose of business irrespective of the capital utilisation in the previous year and, particularly, in view of the intention of the assessee to use the property for the business which was established by the use in the subsequent year, the interest paid must be allowed as an expenditure laid out for the purpose of businessIn the circumstances, we answer the question accordingly with costs of Rs. 500.