M/s Vardhman Polytex Ltd., Ludhiana V. ACIT, Ludhiana

ITA 1002/CHANDI/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63935 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-09-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 26-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Assessee Lawyers: SUBHASH AGGARWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, J M ITA NO. 1002/CHD/2009 ASSESSMENT YEAR : 1998-99 M/S VARDHMAN POLYTEX LTD. V A.C.I.T. CIRCLE 1 CHANDIGARH ROAD LUDHIANA LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH AGGARWAL RESPONDENT BY : SHRI MANJEET SINGH DATE OF HEARING : 12.09.2012 DATE OF PRONOUNCEMENT : 17.09.2012 O R D E R PER T.R.SOOD, A.M IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWIN G GROUND OF APPEAL. THAT THE LD. CIT(A)-I HAS ERRED IN DISALLOWING INT EREST PAID AMOUNTING OF RS. 1,15,69,020/- IN RESPECT OF BORRO WINGS USED FOR EXPANSION OF EXISTING BUSINESS CLAIMED U/S 36(1)(III) OF THE ACT INSPITE OF THE JUDGMENT OF THE HON'BLE S UPREME COURT IN FAVOUR OF THE APPELLANT. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD BO RROWED CERTAIN FUNDS FOR SETTING UP A NEW UNIT AT BADDI AN D INCURRED CERTAIN EXPENSES INCLUDING INTEREST EXPENDITURE. T HE AO RAISED A QUERY THAT WHY SUCH EXPENSES INCLUDING INTEREST SHO ULD NOT BE CAPITALIZED. IT SEEMS THAT THE MATTER HAD TRAVELED TO THE TRIBUNAL EARLIER AND THE TRIBUNAL HAD REMANDED THE ISSUE TO THE AO BECAUSE SIMILAR ISSUE WAS PENDING BEFORE THE HON'BL E JURISDICTIONAL HIGH COURT. LATER ON HON'BLE JURISD ICTIONAL HIGH COURT HAD ALSO DECIDED THE ISSUE AGAINST THE ASSESS EE. HOWEVER, 2 WHILE REPLYING TO THE QUERY IT WAS REPRESENTED THAT THE ASSESSEE HAD ALREADY PREFERRED AN SLP BEFORE THE HON'BLE SUP REME COURT. IT WAS FURTHER SUBMITTED THAT SINCE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN CASE OF CIT V. CORE HEALTH CARE LTD. 298 ITR 194 (S.C) THEREFORE, LATE R DECISION SHOULD BE FOLLOWED. THE AO DID NOT AGREE WITH THE S UBMISSIONS BY OBSERVING THAT THE HON'BLE JURISDICTIONAL HIGH COUR T HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE DEC ISION OF HON'BLE SUPREME COURT IN CASE OF CHALLAPALLI SUGARS LTD. AND ANOTHER V CIT, 98 ITR 167. HE ALSO OBSERVED THAT T HE DECISION OF CORE HEALTH CARE LTD. (SUPRA) WAS DISTINGUISHABLE. 3. ON APPEAL BEFORE THE LD. CIT(A), IT WAS MAINLY S UBMITTED THAT EARLIER HON'BLE PUNJAB & HARYANA HIGH COURT DID NOT FOLLOW THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CASE OF D CIT V. CORE HEALTH CARE LTD. 251 ITR 61 BUT LATER ON WHEN THE D ECISION OF CORE HEALTH CARE LTD. WAS CONFIRMED BY THE HON'BLE SUPREME COURT IN 298 ITR 194 EVEN HON'BLE PUNJAB & HARYANA HIGH COURT FOLLOWED THE SAME IN THE LATER DECISION IN CASE OF CIT V. HIGHWAY CYCLE INDS IN ITA NO. 402 OF 2008. 4. THE LD. CIT(A) AFTER DETAILED DISCUSSION HELD TH AT AS PER THE DIRECTIONS OF ITAT THE AO HAD NO OPTION BUT TO DECI DE THE ISSUE ON THE BASIS OF THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES CASE ARISING OUT ITA NO. 1 OF 2003. SIN CE HON'BLE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE AGA INST THE ASSESSEE IN ASSESSEES OWN CASE, THEREFORE, THE ISS UE WAS DECIDED AGAINST THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE E ARLIER DECISIONS OF THE TRIBUNAL IN ITA NO. 758 OF 2009 FOR AY 2001- 02, ITAS NO. 821 & 822 OF 2009 AND ITA NO. 402 OF 2008. 3 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RE LIED ON THE ORDER OF LD. CIT(A). 7. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE TRIBUNAL IN EARLIER YEARS AFTER GOING THROUGH THE DETAILS FOLLO WED THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CORE HEALTH CAR E LTD. IT WAS ALSO OBSERVED THAT SINCE HON'BLE PUNJAB & HARYANA H IGH COURT HAS ITSELF ACCEPTED THE DECISION OF CORE HEALTH CAR E LTD. IN CASE OF CIT V. HIGHWAY CYCLE INDS. WHEREIN IDENTICAL ISS UE WAS DECIDED AGAINST THE REVENUE BY FOLLOWING THE DECISION OF CO RE HEALTH CARE LTD. THEREFORE, WE ARE OF THE OPINION THAT THE ISS UE REGARDING DEDUCTION ON ACCOUNT OF INTEREST U/S 36(1)(III) FO R PURCHASE OF ASSETS WHICH HAS NOT BEEN PUT TO USE EVEN THEN INTE REST WOULD BE DEDUCTIBLE IN THE LIGHT OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CORE HEALTH CARE LTD. (SUPRA). THEREFORE, FOLLOWING THE DECISION, WE DECIDE THE ISSUE IN FAVOUR OF ASSESSE E. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 17.09.2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 17.09. 2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 4 5