M/s. Siddharth Properties, Pune V. Deputy Commissioner of Income-tax,

CO 11/PUN/2016

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3287 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 08-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHESH D AKHADE
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Depreciation; Business expenditure; Proportionate interest; Question of law; Agreed addition; Capital expenditure
• Section: 143(3); 32; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 2205 /PN/2014 / ASSESSMENT YEAR : 20 1 0 - 11 THE ADDL. COMMISSIONER OF I NCOME TAX, RANGE 3, PUNE . / APPELLANT VS. M/S. SIDDHARTH PROPERTIES, 501, EDEN HALL, MODEL COLONY, SHIVAJI NAGAR, PUNE 41101 6 . / RESPONDENT PAN NO.AA ZFS3607C . / CO NO. 11 /PN/201 6 . / CO NO. 11 /PN/201 6 / ASSESSMENT YEAR : 20 1 0 - 11 M/S. SIDDHARTH PROPERTIES, 501, EDEN HALL, MODEL COLONY, SHIVAJI NAGAR, PUNE 411016 / CROSS OBJECT OR PAN NO.AA ZFS3607C VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 3, PUNE . / RESPONDENT ASSESSEE BY : SHRI NILESH KHANDELWAL REVENUE BY : SHRI MAHESH D. AKHADE / DATE OF HEARING : 10 .0 2 .201 6 / DATE OF PRONOUNCEMENT: 07 . 0 4 .201 6 2 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - II, PUNE, DATED 2 9 .0 8 .2014 RELATING TO ASSESSMENT YEAR 20 1 0 - 11 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE APPEAL OF THE REVENUE. 2. THE REVENUE IN ITA NO.2205/PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE DEPRECIATION UNDER THE IT ACT/RULES ARE ALLOWABLE ON BLOCK OF ASSETS. 3. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HI MSELF IS ADMITTING THAT THE ANCILLARY EXPENSES, THOUGH CAPITAL IN NATURE, IS DIFFERENT FROM THE BLOCK OF WINDMILL AS IT HAS BEEN SHOWN OVER AND OVER THE COST OF WINDMILL IN HIS BOOKS OF ACCOUNT AND HENCE THE ASSESSEE CANNOT CLAIM ACCELERATED DEPRECIATI ON, WHICH IS ALLOWABLE ONLY TO THE BLOCK OF WINDMILL. 4. THE LD. CIT(A) ERRED IN FAILING TO APPRECIATE THAT AS PER THE APPENDIX I OF 4. THE LD. CIT(A) ERRED IN FAILING TO APPRECIATE THAT AS PER THE APPENDIX I OF RULE 5(1A) OF THE IT RULE, DEPRECIATION @ 80% WAS TO BE APPLICABLE ONLY IN RESPECT OF WINDMILL AND THAT THERE WAS NO MEN TION OF DEPRECIATION TO BE APPLICABLE AT THE SAME RATE WITH RESPECT TO THE CIVIL WORK FOR ERECTION OF WINDMILL. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. THE ASSESSEE IN CO NO.11/PN/2016 HAS RAISED THE FOLLOWING GROUNDS OF CROSS - OBJECTIONS: - 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, DISALLOWANCE/ADDITION MADE BY AO AND THAT UPHELD BY TH E FIRST APPELLATE AUTHORITY ON ACCOUNT OF CAPITAL EXPENDITURE OF RS.3,00,000/ - IS IMPROPER, UNJUSTIFIED AND CONTRARY TO THE FACTS AND PROVISIONS OF LAW. THE ADDITION / DISALLOWANCE OF RS.3,00,000/ - BE DELETED. THE RESPONDENT BE GRANTED JUST AND PROPER RE LIEF AS PER PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. 2. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, ADDITION/DISALLOWANCE MADE BY THE AO AND THAT UPHELD BY THE FIRST APPELLATE A UTHORITY PERTAINING TO THE CLAIM OF INTEREST MADE BY THE RESPONDENT OF RS.32,84,047/ - IS IMPROPER, UNJUSTIFIED, CONTRARY TO THE FACTS PREVAILING IN THE CASE. THE RESPONDENT BE GRANTED JUST AND PROPER RELIEF AS PER PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. 3. THE RESPONDENT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 3 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES 4. THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 5. THE ISSUE RAISED IN THE APPEAL FILED BY THE REVENUE IS AGAINST GRANT OF HIGHER RATE OF DEPRECIATION @80% ON CIVIL WORK AND PORTION OF INSTALLATION AND COMMISSIONING WORK INCLUDED IN T HE BLOCK OF ASSETS OF WINDMILL . 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD INSTALLED WINDMILL AND HAVE CLAIMED DEPRECIATION ON THE WINDMILL IN RESPECT OF CIVIL WORK, ERECTION, COMMISSION AND ELECTRICAL INSTALLATIONS @80%. THE AO DURING THE CO URSE OF SCRUTINY ASSESSMENT PROCEEDINGS IN THE CASE OF RESPECTIVE ASSESSEES HAVE RESTRICTED THE CLAIM OF DEPRECIATION ON CIVIL WORKS TO 10% AND ON INSTALLATION AND COMMISSIONING WORK @15% BY PLACING RELIANCE ON THE DECISION OF THE PUNE BENCH OF THE TRIBUNA L IN THE CASE OF POONAWALLA FINVEST AND AGRO PVT. LTD. REPORTED AS 118 TTJ 68. 7. THE CIT(A) ALLOWED DEPRECIATION @80% ON CIVIL WORK AS WELL AS ON INSTALLATION AND COMMISSIONING WORK. THE CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE PLACED RELIANCE ON TH E DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. AMINITY DEVELOPERS AND BUILDERS IN ITA NO.1505/PN/2011 FOR A.Y. 2008 - 09 DECIDED ON 12 - 12 - 2012 AND IN THE CASE OF COOPER FOUNDRY PVT. LTD. IN ITA NO.1437/PN/2007 , ORDER DATED 29.05.2009 . 8. S HRI NILESH KHANDELWAL APPEARED FOR THE ASSESSEE AND SHRI MAHESH D. AKHADE APPEARED FOR THE REVENUE AND PUT FORWARD THEIR CONTENTIONS. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE CIT(A) GRANTED DEPRECIATION @80% ON CIVIL WORK AS WEL L AS PORTION OF INSTALLATION AND 4 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES COMMISSIONING OF WINDMILL BY PLACING RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF AMINITY DEVELOPERS AND BUILDERS (SUPRA) AND THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CA SE OF EASTMAN IMPEX (SUPRA). WE FIND THAT IN THE CASE OF AMINITY DEVELOPERS AND BUILDERS (SUPRA), THE COORDINATE BENCH HAS CONSIDERED THE DECISION RENDERED IN THE CASE OF POONAWALLA FINVEST AND AGRO PVT. LTD., (SUPRA) AND HAS DISTINGUISHED THE SAME. THE TRIBUNAL AFTER DETAILED DISCUSSION ON THE ISSUE FINALLY CONCLUDED THAT CIVIL WORK COMPRISING OF FOUNDATION OF THE WINDMILL IS AN INTEGRAL PART OF WINDMILL ERECTION. THEREFORE, THE SAME IS ELIGIBLE FOR DEPRECIATION AT THE SAME RATE AS IS APPLICABLE IN THE CASE OF WINDMILL. SIMILARLY, THE COST OF COMMISSIONING AND ERECTING WINDMILL CANNOT BE SAID TO BE SEPARATE FROM THE WINDMILL AS IT IS DIRECTLY RELATED TO THE FUNCTIONING OF THE WINDMILL. THEREFORE, THE SAME RATE OF DEPRECIATION WILL APPLY ON THE COST OF COMMISSIONING OF THE WINDMILL. THE RELEVANT EXTRACT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF DCIT VS. AMINITY DEVELOPERS AND BUILDERS (SUPRA) IS AS UNDER : - AMINITY DEVELOPERS AND BUILDERS (SUPRA) IS AS UNDER : - 4. IN THE PRESENT CASE, THE FUNCTIONAL TEST OF THE FOUNDATION HAS BEEN EXPLAINED BY THE LD CIT(A ). THE LD CIT(A) HAS ALSO EXPLAINED, MORE PARTICULARLY, IN THE CASE OF M/S. CHAPHALKAR BROTHERS (SUPRA) HOW THE FOUNDATION IS THE INTEGRATED PART OF THE WIND MILL AS THE SAME IS TO BE ERECTED HAVING TECHNICAL EXPERTISE TO SUSTAIN THE LOAD OF THE TURBINE. I N THE CASE OF POONAWALA FINVEST & AGRO (P) LTD. (SUPRA), THE TRIBUNAL EMPHASIZED ON THE FUNCTIONAL TEST. SO FAR AS THE FOUNDATION IS CONCERNED, AS DISCUSSED BY THE LD CIT(A), THE FUNCTIONAL TEST IS FULFILLED. THERE SHOULD NOT BE QUARREL THAT CIVIL WORK IS INVOLVED IN THE ERECTION OF THE FOUNDATION, BUT EVERY CIVIL WORK CANNOT BE TREATED AS CIVIL WORK AS REQUIRED FOR BRINGING CONSTRUCTION. IN OUR OPINION, COST ON THE FOUNDATION OF THE WIND MILL IS ELIGIBLE FOR THE DEPRECIATION AT THE RATE 180% OR THE RATE W HICH IS APPLICABLE TO THE WIND MILL AS IT IS INTEGRAL PART OF COST OF WIND MILL ERECTION. SAME WAY, THE COST FOR COMMISSION AND ERECTION CANNOT BE SAID TO BE SEPARATE FROM THE WIND MILL AS IT IS DIRECTLY RELATED TO THE FUNCTIONING OF WIND MILL. THE LD CIT( A) HAS RIGHTLY ALLOWED THE DEPRECIATION ON THE PRO RATA BASIS ON THE COST OF FOUNDATION TO THE EXTENT OF THE CIVIL WORK. WE MAY REFER TO HERE THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF ACIT VS. PARRY ENGINEERING & ELECTRONICS, ITA NO. 3317/AHD /2011 DATED 2ND MARCH 2012, IN WHICH IT IS HELD THAT THE FOUNDATION IS A PART OF THE TURBINE AND IS ELIGIBLE FOR THE RATE OF DEPRECIATION WHICH IS APPLICABLE TO THE WIND MILL. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCOR DINGLY, THE SAME IS CONFIRMED. 10. FURTHER, PUNE BENCH OF TRIBUNAL IN THE CASE OF COOPER FOUNDRY PVT. LTD. (SUPRA) HAD ALLOWED THE DEDUCTION IN RESPECT OF COST OF CIVIL WORK WHICH WAS REQUIR ED FOR FOUNDATION OF WINDMILL @ 80% I.E. EXPENDITURE INCURRED ON ERECTION 5 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES AND COMMISSIONING, INCLUDING FOUNDATION WORK. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED BY THE CIT(A) IN PARAS 6.4.4 AT PAGES 22 TO 24 OF THE APPELLATE ORDER, WHICH IS NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. THE HONBLE BOMBAY HIGH COURT IN CIT VS. COOP ER FOUNDRY PVT. LTD. IN ITA NO.1326 OF 2010, VIDE JUDGMENT DATED 14.06.2011 HAS DISMISSED THE APPEAL FILED BY THE REVENUE AND HELD THAT THE FINDING RECORDED BY THE TRIBUNAL THAT RCC FOUNDATION FORMS INTEGRAL PART OF WINDMILL WAS A FINDING OF FACT AND NO QUESTION OF LAW ARISES. THE CIT(A) HAD RELIED ON THE AFORESAID DECISION OF HONBLE BOMBAY HIGH COURT (SUPRA) AND HAD ALSO NOTED THAT THE ASSESSEE HAD INCURRED COST FOR ELECTRICAL WORK INCLUDING SUPPLY AND INSTALLATION OF ELECTRICAL ITEMS, LABOUR CHARGES FOR TESTING AND COMMISSIONING OUT AND CONTRIBUTION TOWARDS POWER EVACUATION INFRASTRUCTURE COST, WHICH WERE INCURRED EXCLUSIVELY FOR RUNNING AND MAINTENANCE OF WINDMILL INSTALLED AND PROPER FUNCTIONING OF WINDMILL. THE ASSESSING OFF ICER ON THE OTHER HAND, HAD ALLOWED DEPRECIATION ON THE COST OF WINDMILL OF RS. 5,52,04,508/ - AND HAD NOT ALLOWED HIGHER DEPRECIATION ON WINDMILL OF RS. 5,52,04,508/ - AND HAD NOT ALLOWED HIGHER DEPRECIATION ON ANCILLARY COST OF RS.81,86,126/ - INCURRED FOR ERECTION OF WINDMILL. ACCORDINGLY, FOLLOWING THE SAME PARITY OF REASONING OF COORDINATE BENCH OF TRIBUNAL AND THE HONBLE BOMBAY HIGH COURT (SUPRA), WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) IN ALLOWING THE CLAIM OF HIGHER DEPRECIATION TO THE ASSESSEE AND IN VIEW THEREOF, WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE . 11. NOW, COMING TO THE CROSS OBJECTION FILED BY THE ASSESSEE. 12. THE FIRST ISSUE RAISED IS AGAINST DISALLOWANCE OF RS.3 LAKHS HOLDING THE SAME TO BE CAPITAL EXPENDITURE. THE ASSESSING OFFICER NOTED THAT AUDITOR OF ASSESSEE IN THE AUDIT REPORT IN COLU MN 17( A ) UNDER THE HEAD EXPENDITURE OF CAPITAL NATURE HAD DECLARED RS.3 LAKHS BEING AMOUNT OF MOBILES WRITTEN OFF. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE TAKEN AS 6 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES CAPITAL EXPENDITURE AND VIDE ORDER SHEET NOTING DATED 22.03.20 13, THE ASSESSEE ADMITTED THAT THE SAME WAS NOT AN ALLOWABLE EXPENDITURE. 13. HOWEVER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT AS PER SECTION 32 OF THE ACT, THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON FIXED ASSETS ONLY IF THE CONDITIONS THERE IN ARE SATISFIED AND AS THE ASSETS IN QUESTION WERE NO MORE IN USE THE SAME HAD BEEN WRITTEN OFF BY THE ASSESSEE AND DEBITED TO THE PROFIT & LOSS ACCOUNT. FURTHER, IT WAS CONTENDED THAT THE LOSS CLAIMED BY THE ASSESSEE WAS A BUSINESS LOSS, WHICH WAS ALLOWABLE UNDER SECTION 28 OF THE ACT. THE CIT(A) NOTED THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD AGREED TO THE AFORESAID ADDITION AND IN SUCH CIRCUMSTANCES LEGALLY, NO APPEAL LIES AGAINST SUCH AGREED ADDITION UNLES S, THE ASSESSEE PROVES COERCION OR MALAFIDE. IN THIS REGARD, THE CIT(A) RELIED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN RAMESH CHANDRA & CO. VS. CIT REPORTED IN 168 ITR 375 (BOM) AND REJECTED THE CLAIM OF ASSESSEE. 14. THE LEARNED AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US POINTED OUT THAT THE ALTERNATE PLEA OF THE ASSESSEE TO ALLOW DEPRECIATION ON THE SAID ASSETS HAS NOT BEEN ADJUDICATED BY THE CIT(A). HE FURTHER STATED THAT THE DEPRECIATION WAS ALLOWABLE ON THE SAID ASSETS A S HELD BY THE AHMEDABAD BENCH OF TRIBUNAL IN INDUCTOTHERM (INDIA) LTD. VS. DCIT (200) 73 ITD 329 (AHMEDABAD) . 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, RELIED ON THE ORDERS OF AUTHORITIES BELOW. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD CLAIMED EXPENDITURE ON ACCOUNT OF MOBILES WRITTEN OFF, WHICH WAS NOT ALLOWED TO THE ASSESSEE BEING CAPITAL EXPENDITURE AMOUNTING TO RS.3 LAKHS. 7 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES THE ASSESSEE AGREED TO THE SAID EXPENDITURE BEING T REATED AS CAPITAL EXPENDITURE BEFORE THE ASSESSING OFFICER AND ADDITION OF RS.3 LAKHS WAS THUS, MADE TO THE TOTAL TAXABLE INCOME. THEREAFTER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A), WHICH WAS REJECTED, IN VIEW OF THE ADMISSION BY ASSESSEE BEFO RE THE ASSESSING OFFICER. THE CASE OF THE ASSESSEE BEFORE US THAT IT IS ENTITLED TO CLAIM DEPRECIATION ON THE AFORESAID ASSETS, IN VIEW OF THE RATIO LAID DOWN BY THE AHMEDABAD BENCH OF TRIBUNAL IN INDUCTOTHERM (INDIA) LTD. VS. DCIT (SUPRA) . 17. WE FIND THAT THE TRIBUNAL IN INDUCTOTHERM (INDIA) LTD. VS. DCIT (SUPRA) HAD HELD THAT UNLESS AND UNTIL SCRAP VALUE OF THE MACHINERY WHICH HAS BEEN DISCARDED, DEMOLISHED OR DESTROYED DURING THE PREVIOUS YEAR IS ASCERTAINED THE SAME CANNOT BE REDUCED FOR THE PURPOS E OF COMPUTING DEPRECIATION. IN THE INSTANT CASE, THE MACHINERY IN QUESTION WAS ONLY SCRAPED DURING THE YEAR, THAT MEANT IT HAD NOT BEEN USED DURING THE PREVIOUS YEAR. THE SCRAP VALUE OF THE SAME HAD NOT BEEN ASCERTAINED AS YET WHICH WOULD BE POS SIBLE ON LY AFTER SELLING THE SAME. THEREFORE, NOTHING COULD BE REDUCED AT PRESENT FROM THE WRITTEN DOWN VALUE OF THE BLOCK ASSETS AND THE TRIBUNAL THUS, DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION AS CLAIMED BY THE ASSESSEE ON THE AFORESAID ASSETS. THE ISSUE ARISING BEFORE US IS SIMILAR TO THE ISSUE BEFORE THE AHMEDABAD BENCH OF TRIBUNAL IN INDUCTOTHERM (INDIA) LTD. VS. DCIT (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION ON THE ASSET S. THE GROUND OF CROSS OBJECTION NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 18. TH E ISSUE IN GROUND NO. 2 RAISED IN CROSS OBJECTION IS AGAINST THE ADDITION OF RS. 32,84,047/ - . 19. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DEBITED INTEREST EXPEN DITURE OF RS. 1,75,78,350/ - , WHICH INCLUDED INTEREST EXPENDITURE AMOUNTING 8 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES TO RS. 32,84,047/ - , WHICH HAD TO BE CAPITALIZED WITH WORK - IN - PROGRESS . THE ASSESSEE ADMITTED BEFORE THE ASSESSING OFFICER THAT THE SAID AMOUNT NEEDS TO BE CAPITALIZED AND THE SAME CO ULD NOT BE ALLOWED AS BUSINESS EXPENDITURE. IN VIEW THEREOF, ADDITION OF RS. 32,84,047/ - WAS MADE TO THE TOTAL TAXABLE INCOME OF THE ASSESSEE. 20. THE CIT(A) NOTED THAT THE ADDITION WAS MADE BASED UPON THE WORKING FURNISHED BY THE ASSESSEE DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AND ALSO THE ASSESSEE HAVING AGREED TO THE AFORESAID CAPITALIZATION OF THE INTEREST VIDE ORDER SHEET NOTING DATED 22.03.2013. THE CIT(A) FURTHER NOTED THAT THE ASSESSING OFFICER HAD NOT DISALLOWED THE CLAIM BASED ON MISAPPROPR IATION OF FACT AS THE ISSUE HA D NOT ARISING FOR EARLIER YEARS AND THIS ISSUE ON SIMILAR FACT HAD BEEN DISALLOWED BY THE CIT(A) IN THE EARLIER YEARS. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES , THE CIT(A) HELD THAT INTEREST COST IS TO BE CAPITALIZED, A GAINST WHICH , THE ASSESSEE IS IN APPEAL. 21. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.56/PN/2012, RELATING TO ASSESSMENT YEAR 2008 - 09, VIDE ORDER DATED 28.06.2012 HAD OBSERVED TH AT WHERE THE ASSESSEE FOLLOWS THE PROJECT COMPLETION METHOD, THE INTEREST RELATABLE TO SPECIFIC PROJECTS WAS TO BE ALLOWED WHEN THE ASSESSEE RECOGNIZES THE REVENUE AND FURTHER, SIMILAR ORDER WAS PASSED IN ASSESSMENT YEAR 2009 - 10. THE LEARNED AUTHORIZED RE PRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE DETAILS WERE GIVEN TO THE ASSESSING OFFICER IN RESPECT OF PROJECT COMPLETED, WHICH ARE PLACED AT PAGES 1 TO 7 OF THE PAPER BOOK, WHICH HAVE NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW. 22. THE LEARNED DE PARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 9 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT THE TRIBUNAL AFTER CONSIDERING THE ISSUE IN ASSESSMENT YEAR 2008 - 09 AND AL SO NOTING THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE I.E. PROJECT COMPLETION METHOD, HELD THAT WHERE THE ASSESSEE WAS CONSTRUCTING VARIOUS PROJECTS AND WAS BOOKING THE REVENUE ON THE COMPLETION OF PROJECT S , ALL COST RELATABLE TO SUCH PROJECTS WHICH ARE C OMPLE TED, ARE TO BE ALLOWED ALONG WITH INTEREST ATTRIBUTABLE TO THE PROJECT IN THE YEAR WHEN THE PROJECT IS COMPLETED AND THE INCOME FROM PROJECT IS OFFERED FOR TAXATION. THE ASSESSING OFFICER WAS DIRECTED TO DETERMINE AND ALLOW PROPORTIONATE INTEREST ATTRIBUT ABLE TO THE PROJECT WHICH WAS COMPLETED AND INCOME OF WHICH HAS BEEN OFFERED TO TAXES AND REMAINING INCOME WAS DIRECTED TO BE CAPITALIZED AND APPORTIONED TO DIFFERENT PROJECTS ON THE BASIS OF UTILIZATION OF BORROWED FUNDS. THE ASSESSEE BEFORE US CLAIMS TH AT THE WORKING OF INTEREST ATTRIBUTABLE TO THE PROJECTS PLACED AT PAGES 1 TO 3 OF THE PAPER BOOK , WERE FILED BEFORE THE ASSESSING OFFICER AND ALSO PLACED AT PAGES 4 TO 6 OF THE PAPER BOOK. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND AT PAGES 4 TO 6 OF THE PAPER BOOK. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE T HE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD, THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION ON ACCOUNT OF INTEREST ATTRIBUTABLE TO SUCH PROJECTS AGAINST THE REVENUE RECOGNIZED OF THE SAID PROJECT . HOWEVER, WHERE THE ASSESSEE HAS NOT RECOGNIZED THE REVENUE OF THE PROJECTS WHICH HAVE NOT BEEN COMPLETED, THEN THE INTEREST ATTRIBUTABLE TO SUCH UNCOMPLETED PROJECTS IS TO BE CAPITALIZED. UNDOUBTEDLY, THE SAID ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2008 - 09 AND DIRECTIONS HAVE BEEN GIVEN TO THE ASSESSING OFFICER TO RE - COMPUTE THE DISALLOWANCE IN THE HANDS OF ASSESSEE ON ACCOUNT OF INTEREST EXPENDITURE. 24. IN THE FACTS OF THE PRESENT CASE, THOUGH THE ASSESSEE HAD DURING THE COURSE OF ASSESSMENT PROCEEDINGS AGREED TO THE AFOR ESAID ADDITION, BUT IN VIEW OF THE FACTS BEING BROUGHT TO THE NOTICE OF CIT(A) AND ALSO BEFORE US, WE FIND 10 ITA NO. 2205 /PN/2014 CO NO. 11 /PN/2016 M /S. SID D HARTH PROPERTIES MERIT IN THE CLAIM OF ASSESSEE. FOLLOWING THE SAME LINE OF REASONING AS IN ASSESSMENT YEAR 2008 - 09, WE DIRECT THE ASSESSING OFFICER TO RE - COMPUTE TH E INTEREST EXPENDITURE IN RELATION TO THE PROJECTS UNDERTAKEN BY THE ASSESSEE AND SUCH INTEREST WHICH IS RELATABLE TO PROJECT , REVENUE OF WHICH HAS BEEN RECOGNIZED BY THE ASSESSEE IN THE YEAR UNDER APPEAL, THEN THE SAME IS TO BE ALLOWED AS DEDUCTION. HOWE VER, THE BALANCE INTEREST EXPENDITURE IS TO BE ALLOCATED TO THE PROJECTS UNDER CONSTRUCTION AND THE INTEREST HAS TO BE CAPITALIZED. THE GROUND OF CROSS OBJECTION NO.2 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. 25 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 7 TH DAY OF APRIL , 2016 SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CH OWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 7 TH APRIL , 2016 GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPOND ENT; 3. ( ) / THE CIT(A) - II, PUNE; 4. / THE CIT I I , PUNE; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE