Judgment :- SMT. A. SUBBULAKSHMY, J. The assessee is a public limited company deriving income from manufacture and sale of automobile parts. The assessment year involved is 1981-82. The assessee claimed depreciation and investment allowance on further interest payable on the deferred payment liability incurred in connection with purchase of machinery by capitalising the interest. That claim was negatived by the IAC as it is in the nature of interest on borrowing for acquiring the machinery and it will be allowed in the year in which it was payable. On appeal, the CIT(A) held that the assessee had already commenced production in the earlier year and interest payable was allowable as revenue expenditure in the same manner as guarantee commission paid on deferred payment was allowed as revenue expenditure by this Court in the case of Sivakami Mill Ltd. vs. CIT. On further appeal, the Tribunal followed the decision of Gujarat High Court in the case of Ballarpur Paper & Straw Board Mills Ltd. vs. CIT, and allowed the assessee's appeal. On that, the reference has arisen at the instance of the Revenue. 2. The following question of law has been referred to this Court for opinion, "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest payable by the assessee on deferred payment liability for purposes of machinery is liable to be capitalised and entitled to depreciation and investment allowance ?" 3. Sec. 43(1) of the IT Act, 1961, defines" actual cost" as the actual cost of the assets to the assessee. The Karnataka High Court in the case of CIT vs. Widia (India) Ltd. has dealt with the actual cost as capitalised amount payable in instalments in respect of capital assets under deferred payment scheme. It held that"Sec. 43(1) of the IT Act, 1961, defines" actual cost"as the actual cost of the assets to the assessee, reduced by that" portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority. Since the definition of "actual cost" repeats the same words again, one has to look at the normal concept of "actual cost". Since the definition of "actual cost" repeats the same words again, one has to look at the normal concept of "actual cost". The accepted accountancy rule for determining the cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition, and that the assessee was entitled to investment allowance on the cost of assets as enhanced due to fluctuations in foreign currency rates. "4. Counsel for the Revenue submitted that Expln. 8 to s. 43(1) of the IT Act, 1961, which came into effect from 1st April, 1974, was added with the object of removing doubts with regard to the includibility of interest relatable to any period after the asset is first put to use in the production in its actual cost. Expln. 8 to s. 43(1) reads as follows". For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount is as relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset. "The Expln. 8 to s. 43(1) of the IT Act was inserted by s. 9 of the Finance Act, 1986, with retrospective effect from 1st April, 1974. It declares that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included and shall be deemed never to have been included in the actual cost of such assetThe Calcutta High Court, in the case of CIT vs. India Steamship Co. Ltd. has held that," Expln. Ltd. has held that," Expln. 8 to s. 43(1) intends to clarify the position in law as regards the capitalisation of interest paid in connection with acquisition of an asset after it has been put to use shall not form part and shall be deemed never to have formed part of the actual cost of the asset and that the interest paid on amounts borrowed and other related expenses in connection with the acquisition of ships before such ships were delivered to the assessee, the same could not be capitalised for the purpose of claiming development rebate. "5. In the instant case, the assessee claimed depreciation on future interest payable on deferred payment scheme and investment allowance under the deferred payment liability. 6. A direct decision on this aspect is the decision of the Bombay High Court in CIT vs. Rajaram Bandekar. In that decision the Bombay High Court has held that" A bare reading of Expln. 8 to s. 49(1) of the IT Act, 1961, inserted w.e.f. 1st April, 1974, shows that it was added with the object of removing doubts with regard to the includibility of interest relatable to any period after the asset has first been put to use, in the computation of its actual cost. By this Explanation, it has been declared by Parliament that 'where any amount is paid or is payable as interest' in connection with the acquisition of an asset 'so much of such amount as is relatable to any period after such asset is first put to use shall not be included and shall be deemed never to have been included, ' in the actual cost of such assets. Parliament, in the above Explanation, has "taken full care to couch the Explanation in the widest possible terms to avoid any further controversy in regard to the very same issue on the basis of the manner of payment of interest or time of payment thereof. This has been done by the use of the expression "where any amount is paid or is payable as interest". It will not be correct to say that the legal position in regard to includibility of interest on deferred payment in the computation of the actual cost of an asset did not undergo any change as a result of the insertion of Expln. It will not be correct to say that the legal position in regard to includibility of interest on deferred payment in the computation of the actual cost of an asset did not undergo any change as a result of the insertion of Expln. 8 with retrospective effect and the specific declaration by Parliament made therein that the part of the interest mentioned therein would not be includible in the actual cost. The very purpose of this amendment was to clarify the position in this regard and to set at rest the controversy that had arisen." It has further been held therein that, a perusal of the IDBI scheme showed that it visualised charging of interest and for the interest amount payable by the assessee on instalment basis for acquisition of an asset under the deferred payment scheme for the purpose subsequent to the date the machinery was first put to use, Expln. 8 to s. 43(1) was clearly attracted and the amount of interest could not be included in the actual cost for the purposes of allowing depreciation and development rebate. In the instant case, depreciation has been claimed on interest payable on deferred payment scheme which is identical to the facts involved in the case decided by the Bombay High Court. We concur with the view taken by the Bombay High Court. 7. We hold that the amount of interest could not be included in the actual cost for the purpose of depreciation and development rebate [sic - investment allowance] applying Expln. 8 to s. 43(1) of the IT Act, 1961. The view taken by the Tribunal is not justified. Accordingly, we answer the question in favour of the Revenue and against the assessee. No costs.