York Prints Pvt. Ltd., Ahmedabad V. The Dy.CIT, Circle-8, Ahmedabad

CO 173/AHD/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2742 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G C DAXINI SR DR
• Keywords: Capital asset; Depreciation; Additional evidence; Wrong claim; Unabsorbed depreciation; Revenue expenditure
• Section: 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.84/AHD/2014 AY 2010-11 & CO. NO.173/AHD/2014 - AY 2010-11 (IN ITA NO.84/AHD/2014 AY 2010-11) THE DY.CIT CIRCLE-8 AHMEDABAD / VS. YORK PRINTS PVT.LTD. NR.COZY HOTEL, RANIPUR PATIA NAROL, SARKHEJ HIGHWAY ROAD AHMEDABAD # ./ ./ PAN/GIR NO. : AAACY 0544 J ( #& / APPELLANT ) .. ( '#& / RESPONDENT & CROSS OBJECTOR ) #&( / APPELLANT BY : SHRI G.C. DAXINI, SR.DR '#& )( / RESPONDENT BY : SHRI S.N. DIVATIA, AR *+ ), / DATE OF HEARING 29/03/2017 -./0 ), / DATE OF PRONOUNCEMENT 31 / 03 /2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD [CIT(A) IN SHORT] ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 2 - DATED 25/10/2013 PASSED FOR THE ASSESSMENT YEAR (AY) 2010-11 AND ASSESSEE IS IN CROSS OBJECTION THEREON. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL:- 1) THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO RECOM PUTED BOOK PROFIT AFTER TAKING INTO ACCOUNT UNABSORBED BUSINES S LOSSES OF EARLIER YEAR OR UNABSORBED DEPRECIATION AS PER DEPA RTMENTAL RECORDS. 2A) THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN REDUCING THE DISAL LOWANCE TO RS.2,24,334/- AS AGAINST RS.8,83,758/- ON ACCOUNT O F UTILIZATION OF FUNDS FOR PURCHASE OF CAPITAL GOODS, & THEREFORE TH E AO HAS DISALLOWED THE INTEREST FOR THE FULL YEAR. 2B) THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN ADMITTING ADDITION AL EVIDENCE IN VIOLATION OF RULE 46A OF THE I.T.RULES. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABA D OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L D.COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD MAY BE SET-A-SIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. AGAINST GROUND NO.1 OF THE REVENUES APPEAL, TH E LD.AR FOR THE ASSESSEE SUBMITTED THAT ORIGINALLY THE ASSESSEE RED UCED PROFITS OF ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 3 - RS,10,90,422/- IN TERMS OF PROVISIONS OF CLAUSE-(VI I) OF EXPLAANTION-1 OF SUB-SECTION (2) OF SECTION 115JB OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') FOR COMPUTAT ION OF BOOK PROFIT UNDER ERRONEOUS IMPRESSION THAT THE ASSESSEE-COMPANY IS A SICK-INDUSTRIAL COMPANY. HOWEVER, ON REALIZING MISTAKE, THE COMPUT ATION OF BOOK PROFIT WAS REVISED IN THE COURSE OF ASSESSMENT. THE ASSES SEE ALSO SUBMITTED WITH REFERENCE TO REVISED WORKING OF BOOK PROFIT WH EREBY IT CLAIMED DEDUCTION OF BROUGHT FORWARD BUSINESS LOSSES AND UN ABSORBED DEPRECIATION AS PER BOOK AND REDUCED THE SAME FROM THE PROFITS OF THE COMPANY TO CALCULATE BOOK PROFIT. THE ASSESSING OF FICER (AO) DENIED THIS FRESH CLAIM TOWARDS REDUCTION OF BOOK PROFIT O N ACCOUNT OF UNABSORBED BROUGHT FORWARD BUSINESS LOSS ETC. ON T HE GROUND THAT CLAIM WAS NOT MADE IN THE RETURN OF INCOME. FOR DOING S O, THE AO RELIED UPON THE DECISION IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (2006) 157 TAXMAN 1 (SC). 3.1. THE LD.AR SUBMITTED THAT THE CIT(A) IN FIRST A PPEAL HAS AGREED WITH THE ACTION OF THE ASSESSEE IN FILING THE REVIS ED WORK OF BOOK PROFIT AFTER CLAIMING DEDUCTION TOWARDS UNABSORBED BROUGH T FORWARD BUSINESS LOSSES ETC. THE RELEVANT OPERATIVE PARA OF THE OR DER OF THE CIT(A) READ AS UNDER: 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND S UBMISSIONS OF THE A.R. OF THE APPELLANT CAREFULLY. IT IS SEEN TH AT THE APPELLANT HAD ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 4 - MADE A WRONG CLAIM IN THE RETURN OF INCOME FILED TH AT IT WAS A SICK COMPANY AS PER CLAUSE (VII) OF THE EXPLANATI ON TO SECTION 115JB(2) OF THE ACT. THE AO NOTICED THIS ERROR AND ASKED THE APPELLANT TO EXPLAIN HOW IT WAS A SICK COMPANY AS PER CLAUSE (VII) OF THE EXPLANATION TO SECTION 115JB(2) OF THE ACT. AT THE TIME OF ASSESSMENT THE APPELLANT ACCEPTED THE FACT THAT IT WAS NOT A SICK COMPANY AS PER CLAUSE (VII) OF THE EXPLANATI ON TO SECTION 115JB(2) OF THE ACT AND FURNISHED A REVISED COMPUTA TION OF BOOK PROFIT WHEREIN THE APPELLANT MADE ADJUSTMENT FOR UN ABSORBED LOSSES AND BROUGHT FORWARD UNABSORBED DEPRECIATION. THE AO HELD THAT THE REVISED COMPUTATION AMOUNTED TO MAKIN G FRESH CLAIMS WHICH WAS NOT ADMISSIBLE AS PER THE DECISION OF THE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT REPORTED IN 157 TAXMAN 1 (SC). THE ABOVE DECISION OF THE AO IS NOT RIGHT BECAUSE AFTER REJECTING THE CLAIM OF THE APPELLANT REGARDING THE COMPANY BEING A SICK COMPANY AS PER CLAUSE (VII) OF THE EXPLANATI ON TO SECTION 115JB(2) OF THE ACT, THE AO WAS DUTY BOUND TO COMPU TE THE CORRECT BOOK PROFIT U/S.115JB OF THE ACT. WHILE MAKING THE CORRECT COMPUTATION OF INCOME U/S.115JB OF THE ACT THE LESS ER AMOUNT OF THE TWO VIZ. UNABSORBED BUSINESS LOSSES OF EARLIER YEARS OR UNABSORBED DEPRECIATION HAS TO BE REDUCED. THUS FU RNISHING THESE DETAILS DOES NOT AMOUNT TO MAKING FRESH CLAIMS. TH E AO IS DIRECTED TO RECOMPUTE THE BOOK PROFIT OF THE APPELL ANT AFTER TAKING INTO ACCOUNT UNABSORBED BUSINESS LOSSES OF EARLIER YEARS OR UNABSORBED DEPRECIATION AS PER THE DEPARTMENTAL REC ORDS. 3.2. THE LD.AR RELIED UPON THE ORDER OF THE CIT(A). 4. THE LD.DR FOR THE REVENUE, ON THE OTHER HAND, RE LIED UPON THE ORDER OF THE AO. ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 5 - 5. THE SHORT QUESTION IS WHETHER THE APPELLATE AUTH ORITY CAN ENTERTAIN THE FRESH CLAIMS ON THE BASIS OF FACTS AVAILABLE ON RECORD WITHOUT REVISION OF THE RETURN OF INCOME UNDER S.139(5) OF THE ACT. THE ISSUE IS NO LONGER RES INTEGRA . IT IS WELL SETTLED THAT THE ASSESSEE IS ENTITLED TO DO SO. REFERENCE MAY BE MADE TO THE DECISION OF CIT VS. PR UTHVI BROKERS & SHAREHOLDERS (P) LTD. 349 ITR 336 (BOM.) IN THIS RE GARD. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN ACCEPTING THE CLAIM OF ASSESSEE AFTER APPRECIATION OF FACTS. ACCORDINGLY, REVENUES GROUND NO.1 IS DISMISSED. 6. GROUND NO.(2A) RELATES TO DISALLOWANCE OF INTERE ST EXPENDITURE OF RS.8,83,785/- BY THE AO UNDER S.36(1)(III) OF THE A CT ON THE GROUND THAT INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR AC QUISITION OF A CAPITAL ASSET IS REQUIRED TO BE CAPITALIZED AND CANNOT BE A LLOWED AS REVENUE EXPENDITURE. THE CIT(A) AFTER APPRECIATION OF FACT S RESTRICTED THE DISALLOWANCE TO RS.2,24,334/-. THE RELEVANT PARA O F THE ORDER OF THE CIT(A) READS AS UNDER:- 8. GROUND NOS.11 TO 18 RELATE TO THE INTEREST OF RS.8,83,758/- DISALLOWED BY THE AO ON ACCOUNT OF UTILIZATION OF B ORROWED FUNDS IN PURCHASE OF ASSETS NOT INSTALLED BEFORE THE END OF THE PREVIOUS YEAR. 9. IT IS SEEN THAT THE ASSESSING OFFICER HAS LEVIE D PENALTY OBSERVING AS UNDER: ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 6 - DISALLOWANCE OF INTE4REST U/S.36(1)(III) OF THE A CT. ON PERUSAL OF FIXED ASSETS SCHEDULE OF ANNUAL REPOR T OF THE ASSESSEE. IT IS SEEN THAT CERTAIN ASSETS ARE UNDER INSTALLATION. AS PR THE PROVISIONS OF SECTION 36(10(III) OF THE ACT, ANY INTEREST PAID IN RESPECT OF CAPITAL BORROWED FOR ACQUISITION OF A N ASSET FOR EXTENSION OF THE EXISTING BUSINESS IS NOT ALLOWABLE FOR ANY PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BO RROWED FOR ACQUISITION OF THE ASSETS TILL THE DATE ON WHICH SUCH ASSET WAS PUT TO USE. THEREFORE, VIDE ORDER SHEET ENTRY DATED 22 /12/2012, THE ASSESSEE WAS ASKED TO FURNISH BANK STATEMENT OF THE ACCOUNT FROM WHICH PAYMENTS WERE MADE FOR ADDITION OF ASSETS UND ER INSTALLATION. THE ASSESSEE WAS ALSO ASKED TO SHOW CAUSE AS TO WHY SHOULD INTEREST EXPENDITURE ATTRIBUTABLE TO ACQUISI TION OF ASSETS UNDER INSTALLATION NOT BE DISALLOWED AS PER THE PRO VISIONS OF SECTION 36(1)(III) READ WITH EXPLANATION 8 OF SUB S ECTION (1) OF SECTION 43 OF THE ACT. VIDE SUBMISSION DATED 12/12/2012, THE ASSESSEE FURN ISHED EXPLANATION IN THIS REGARD. RELEVANT PARA IS REPRO DUCED AS UNDER: 5. CAPITALIZATION OF INTEREST ON MACHINERY UNDE R INSTALLATION DURING THE YEAR ASSESSEE HAS MADE ADDITION OF RS.69 08631 TO THE PLANT & MACHI8NERY WHICH IS SHOWN AS MACHINERY UNDER INST ALLATION ON WHICH DEPRECIATION IS NOT CLAIMED. OUT OF TOTAL AD DITION OF RS.6908631 PAYMENT OF RS.2675854/- IS NOT MADE ARE OUTSTANDING AS AT 31/03/2010 STATEMENT OF AMOUNT PURCHASE MADE FROM EACH PARTY A MOUNT OUTSTANDING AS AT 31/03/2010 ALONG WITH THE LEDGER ACCOUNT SUCH PARTIES ARE SUBMITTED HEREWITH MACHINERY UNDER INST ALLATION IS ALSO ENCLOSED HEREWITH. STATEMENT OF MONTH WISE ADDITION TO FIXED ASSET IS ENCLOSED HEREWITH ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 7 - SEE PAGE NO.337 ASSESSEE HAS NOT TAKEN ANY TERM LOAN FOR THE PURCHA SE OF MACHINERY. ASSESSEE HAS MADE PAYMENT OUT OF CURRENT WORKING CA PITAL HINDS AVAILABLE WITH IT COPY OF BANK BOOK REFLECTING PAYM ENTS ARE ENCLOSED HEREWITH. BANK BOOK OF BANK OF BARODA ODTD A/C.NO.4/076 AND 4 /359 SEE PAGE NO.354 TO 364 BANK BOOK OF THE VIJAY CO.OP. BANK A/C.NO.241 SEE P AGE NO.365 TO 395 THERE IS NO INCREASE IN DEPOSIT FROM DIRECTORS. TH ERE IS NO INCREASE IN DEPOSIT FROM SHARE HOLDERS UP TO FEBRUARY 2010. TH ERE IS INCREASED IN DEPOSIT FROM SHARE HOLDER DURING THE MONTH OF-MARCH 2010 WHICH WERE UTILIZED FOR MAKING PAYMENT TO CREDITORS FOR G OODS AS DETAILED HEREUNDER:- DATE RECEIPT NAME OF AMOUNT DATE PAYMENT NAME AMOUNT 02/03/2010 R.N.ENTERPRISE DHRUMIL 1200000 05/03/2010 SHRIJI ENTERPRISE 1657030 08/03/2010 R.N.ENTERPRISE 2000000 09/03/2010 ALSAKEM 37153409 10/03/2010 RN ENTERPRISE 1800000 10/03/2010 ASHIVINI DYECHEM 564531 557750 11/03/2010 DHRUMIL 1800000 15/03/2010 RN ENTERPRISE DHRUMIL 550000 550000 15/03/2010 THERMAX LIMITED (FOR 607583 30/03/2010 RN ENTERPRISE 300000 TOTAL 1070000 TOTAL 10533152 MONTHWISE POSITION OF UNSECURED LOAN FROM DIRECTORS & SHARE HOLDERS ENCLOSED HEREWITH. ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 8 - SEE PAGE NO.396 TO 397 ASSESSEE HAS RECEIVED JOB SECURITY DEPOSIT OF RS.56 00000/- IN THE MONTH OF NOVEMBER 2009 AND RS.6900000/- IN THE MONTH OF DECE MBER 2009 WHICH WERE UTILIZED FOR MAKING PAYMENT TO CREDITORS WHICH IS R EFLECTED IN COPY OF BANK BOOK PLEASE NOTE THAT ASSESSEE HAS NOT PAID ANY INT EREST ON JOB SECURITY DEPOSIT AMOUNT. ASSESSEE HAS CREDITED AMOUNT OF RS .10800000/- ON RESTRUCTURING OF CREDITORS. ELECTRON COLOUR CHEM P VT.LTD. I.E. REDUCING AMOUNT FROM CREDITORS LIST INCREASING UNSECURED LOA NS FROM OTHERS. ASSESSEE HAS AVAILED WORKING CAPITAL TERM LOAN FROM THE VIJAY CO.OP.BANK ON 26/12/2009 AND UTILIZED IT FOR MAKING PAYMENT TO TH E CREDITORS WHICH IS REFLECTED IN BANK BOOK. THE SUBMISSION OF THE ASSESSEE IS DULY CONSIDERED. HOWEVER, THE SAME IS NOT FOUND; ACCEPTABLE. THE ASSESSEE HAS FAILED TO PRODUCE RELEVANT BANK STATEMENT AS REQUESTED. AS SUBMITTED BY THE ASSESS EE ITSELF, THE PAYMENTS FOR PURCHASE OF ASSETS HAVE BEEN MADE FROM THE O.D. ACCOUNT HELD WITH THE BANK. THEREFORE, THE EXPENDITURE INCURRED ON A CCOUNT OF O.D. ACCOUNT INTEREST IS ATTRIBUTABLE TO THE PURCHASE OF ASSETS TO THE EXTENT OF PAYMENTS MADE FOR THE SAME. FURTHER, ON PERUSAL OF BALANCE SHEET OF THE ASSESSEE, IT IS SEEN THAT BORROWED FUNDS CONSTITUTE MAJORITY OF THE SOURCE OF THE FUNDS OF THE COMPANY. AGAINST THE SECURED A ND UNSECURED LOANS TOTALLING TO RS.9,35,39,944/-, THE ASSESSEE HAS ITS OWN FUNDS IN THE FORM OF SHARE CAPITAL OF RS.30,09,500/- AS ON 31 ST MARCH, 2010. THEREFORE, THE ASSESSEES CONTENTION REGARDING THEIR BEING NO CHAN GES IN THE DEPOSITS IS TOTALLY IRRELEVANT. ON PERUSAL OF SCHEDULE F OF TH E BALANCE SHEET, IT IS SEEN THAT TOTAL ASSETS UNDER INSTALLATION ARE REFLE CTED AT RS.73,64,654/-. THEREFORE, INTEREST ATTRIBUTABLE TO PAYMENTS MADE F OR ACQUISITION OF ASSETS WHICH WERE NOT PUT TO USE, IS COMPUTED @ 12% . ACCORDINGLY, AN INTEREST OF RS.8,83,758/- IS HEREBY DISALLOWED. 10. DURING THE APPELLATE PROCEEDINGS, THE A.R. OF THE APPELLANT SUBMITTED AS UNDER: ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 9 - 5. DISALLOWANCE OF INTEREST U/S.36(1)(III) OF TH E ACT. THE THIRD EFFECTIVE GROUND OF APPEAL RELATES TO DIS ALLOWANCE OF RS.883758 AS THE INTEREST ON CAPITAL BORROWED FOR A CQUISITION OF FIXED ASSETS. 5.1 APPELLANT HAS MADE ADDITION OF RS.6908631 TO PLANT AND MACHINERY WHICH IS TREATED AS UNDER INSTALLATION. ASSESSEE HAS NOT MADE PAYMENT OF RS.2675854 TO THE SUPPLIER OF MACHI NERY AS ON 31/03/2010. STATEMENT OF MONTH-WISE EDITION TO FIXED ASSETS WAS SUBMITTED, APPELLANT HAS NOT TAKEN ANY TERM LOAN FOR THE PURPO SE AND SAME WAY, THERE WAS NO INCREASE IN BORROWING FUND EXCEPT IN THE MONTH OF FEB 2010 WHICH WERE UTILIZED FOR MAKING PAYMENT TO CREDITORS. APPELLANT SUBMISSION WAS REPRODUCED AT PARA 5 OF AS SESSMENT ORDER. 5.2. A.O. WAS WRONGLY OBSERVED THAT ASSESSEE HAS F AILED TO PRODUCE RELEVANT BANK STATEMENT. ASSESSEE HAS SUBM ITTED COPY OF BANK BOOK REFLECTING PAYMENT VIDE PAGE NO.354-364 A ND PAGE NO.365-395 IN ITS SUBMISSION DT. 12/12/2012 NOTING FOR WHICH IS MADE AT PARA 6.2 OF ASSESSMENT ORDER. ASSESSEE HAS MADE PAYMENT OUT OF COLLECTION IT MADE OF CURRENT YEAR B USINESS. THERE IS INCREASE IN CREDITOR WHICH WERE USED FOR MAKING ADDITION TO FIXED ASSETS I.E. NON INTEREST BEARING FUND WERE UT ILIZED. FURTHER WITHOUT PREJUDICE TO ABOVE APPELLANT SUBMIT S THAT IF INTEREST IS TO BE CALCULATED IT SHOULD BE CALCULATE D ON USE BASIS I.E. FROM DATE TO USE TO END OF YEAR AND ON A MT. OF FUND USED I.E. AMT USED FOR MAKING PAYMENT FOR PURCHASE OF CAPITAL GOODS. ASSESSEE SUBMITS HERE WITH DATE WIS E CALCULATION SHEET OF AMT. OF INTEREST AND ALSO INTE REST ON UNPAID AMT. (SEE PAGE NO 1-10 ATTACHED HERE). TOTA L INTEREST ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 10 - COMES TO RS.361722 ON ADDITION TO PLANT AND MACHINE RY OUT OF WHICH INTEREST ON UNPAID AMT.OF PLANT AND MACHIN ERY COMES TO RS.137388 SO INTEREST COST OF RS.224334 (3 61722- 137388) COMES ON MACHINERY INSTALLATION AS AGAINST RS.883758 DETERMINED BY A.O. 11. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND S UBMISSION OF THE A.R. OF THE APPELLANT CAREFULLY. IT IS SEEN TH AT THE AO HAS ASSUMED THAT THE APPELLANT HAS PAID AN INTEREST @ 8 % PER ANNUM ON ALL THE MONEY BORROWED. THE AO HAS ALSO ASSUMED THAT THE ENTIRE MONEY FOR THE PURCHASE OF THE CAPITAL GOODS WAS SPENT ON 1.4.2009. THIS IS WHY THE AO HAS DISALLOWED THE IN TEREST PAID ON BORROWED FUNDS USED IN THE PURCHASE CAPITAL GOODS F OR THE FULL YEAR @ 8%. THE AR OF THE APPELLANT HAD NO OBJECTIO N TO THE INTEREST ON THE FUNDS BORROWED AND USED FOR PURCHAS E OF CAPITAL GOODS BEING DISALLOWED. THE AR ALSO CONTENDED THAT SOME OF THE SUPPLIERS FOR THE MACHINES HAD NOT BEEN PAID AND NO INTEREST ON SUCH UNPAID AMOUNT COULD NO DISALLOWED. HOWEVER TH E CONTENTION OF THE AR OF THE APPELLANT IS THAT THE ENTIRE MONEY WAS NOT USED IN THE PURCHASE OF THE CAPITAL GOODS ON 1.4.2009. THU S THE AO SHOULD HAVE ONLY DISALLOWED THE INTEREST FROM THE T IME WHEN THE CAPITAL GOODS WERE PURCHASED TILL THE TIME THE CAPI TAL GOODS WERE PUT TO USE. THE ABOVE CONTENTION OF THE AR OF THE APPELLANT APPEARS JUSTIFIED. THE AO HAS DISALLOWED THE INTER EST BECAUSE AS PER THE AO SINCE THE APPELLANT HAD NOT PRODUCED THE BANK ACCOUNT TO SHOW THE UTILIZATION OF FUNDS FOR PURCHASE OF CA PITAL GOODS HENCE HE DISALLOWED THE INTEREST FOR THE FULL YEAR. THE AR STATED THAT ALL THE DETAILS INCLUDING THE DA TE OF PURCHASE OF THE CAPITAL GOODS WERE AVAILABLE WITH THE AO HENCE HE WAS NOT JUSTIFIED IN DISALLOWING THE INTEREST FOR THE FULL YEAR. 11.1. THE AR OF THE APPELLANT WAS ASKED TO FURNISH THE COMPLETE WORKING OF THE INTEREST WHICH WAS TO BE DISALLOWED BASED ON THE ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 11 - DATE ON WHICH THE FUNDS WERE USED FOR THE PURCHASE OF THE ASSET TILL THE DATE WHEN IT WAS ACTUALLY PUT TO USE. VIDE SUB MISSIONS FILED ON 23.10.2013 THE AR OF THE APPELLANT HAS FILED THESE DETAILS. THE DETAILS FILED SHOW THAT THE ENTIRE AMOUNT OF INTERE ST WHICH COULD BE DISALLOWED IS RS.2,24,334/-. IN VIEW OF THE ABOVE, THE DISALLOWANCE IS REDUCED FROM RS.8,83,758/- TO RS.2,24,334/-. 7. BOTH THE ASSESSEE AS WELL AS REVENUE ARE AGGRIEV ED BY THE ORDER OF THE CIT(A). THE ASSESSEE HAS AGITATED THE CONFIRM ATION OF DISALLOWANCE TO THE EXTENT OF RS.2,24,334/- BY THE CIT(A), WHERE AS THE REVENUE HAS CHALLENGED THE PARTIAL RELIEF MADE AVAILABLE TO TH E ASSESSEE ON THE ISSUE. 8. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO EXTENSION OF EXISTING BUSINESS ON PURCHASE OF PLANT & MACHINE RY PER SE . SECONDLY, HE CONTENDED THAT BORROWED FUND HAVE NOT BEEN UTILI ZED FOR THE ACQUISITION OF THE PLANT & MACHINERY. THELD.AR REL IED UPON THE ORDER OF THE CIT(A) FOR THE RELIEF GRANTED BY HIM AND ADD ED HOWEVER THAT THE RESTRICTION OF RELIEF WAS NOT PROPER. 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE CIT( A) AND AO. WE FIND THAT THE CIT(A) HAS CORRECTLY APPRECIATED THE FACTS IN PERSPECTIVE. THE ORDER OF THE CIT(A) IS ON OBJECTIVE CONSIDERATI ON OF FACTS AND SELF- EXPLANATORY. WE DO NOT FIND ANY INFIRMITY IN THE CONCLUSION ARRIVED BY ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 12 - THE CIT(A). CONSEQUENTLY, GROUND NO.(2A) OF THE RE VENUES APPEAL AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE D ISMISSED. 10. GROUND NO.2(B) OF REVENUES APPEAL CONCERNS ADM ISSION OF ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE I.T.RULES, 1962. HOWEVER, IN THE COURSE OF HEARING, THE REVENUE HAS NOT ADDRESSED US AS TO HOW THE CIT(A) HAS ADMITTED ERROR IN APPLICABILI TY OF RULE 46A OF THE I.T.RULES. NOTWITHSTANDING RULE 46A OF THE IT RULE S, THE CIT(A) HAS INHERENT POWER UNDER S.250(4) TO CALL FOR AND ADMIT SUCH EVIDENCE AS NECESSARY FOR THE DISPOSAL OF THE APPEAL. THEREFOR E, RULE 46A DOES NOT ACT AS A FETTER FOR EXERCISING THE POWER AVAILABLE TO THE CIT(A). THUS GROUND NO.2(B) RAISED BY THE REVENUE HAS NO FORCE I N LAW AND IS ACCORDINGLY DISMISSED. 11. IN THE COMBINED RESULT, REVENUES APPEAL AS WEL L AS CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31 / 0 3 /201 7 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 31/ 03 /2017 4..*,.*../ T.C. NAIR, SR. PS ITA NO.84/AHD/2 014 & CO NO.173/AHD/2014 DCIT VS. YORK PRINTS P.LTD. ASST.YEAR 2010-11 - 13 - !'!# / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-I, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 29.3.17 (DICTATION-PAD 13 -PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.3.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.31.3.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.3.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER