Unity Organics Pvt. Ltd., Ahmedabad V. The Dy.Commissioner of Income Tax, Circle-4(1)(2), Ahmedabad

ITA 1265/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8086 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 13-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ROHAN POPAT
• Keywords: Corroborative evidences
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER UNITY ORGANICS PVT. LTD., 906, ATMA HOUSE, NR. SALES TAX BHAVAN, ASHRAM ROAD, NAVRANGPURA, AHMEDABAD - 380009 PAN: AAACU3621L (APPELLANT) VS THE DCIT, CIRCLE - 4(1)(2), AHMEDABAD (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI ROHAN POPAT , A.R. DATE OF HEARING : 04 - 06 - 2 018 DATE OF PRONOUNCEMENT : 21 - 06 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2012 - 13 , ARIS ES FROM ORDER OF THE CIT(A) - 8 , AHM EDABAD DATED 26 - 04 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOW ING GROUNDS OF APPEAL: - 1. NOT DELETING THE ADDITION OF RS.7,92,826/ - ORIGINALLY MADE BY THE AO BY DISALLOWING THE INTEREST PAID IN RELATION TO LOAN TO PURCHASE LAND IN INDUSTRIAL ESTATE AT THE DAHEJ, GIDC U/S 36(1)(III); 2. NOT RELYING UPON THE PARA 16 O F AS - 16 (BORROWING COSTS) PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA WHICH IS MANDATORY IN NATURE; 3. NOT CONSIDERING THE BOARD RESOLUTIONS OF THE COMPANY PLACED BEFORE THE HON'BLE CIT(A), WHICH WERE PASSED IN THE F.Y. 2007 - 08 TO JUSTIFY THE INTENTION OF PURCHASE OF LAND, I T A NO . 1265 / A HD/ 20 16 A SSESSMENT YEAR 2012 - 13 I.T.A NO. 1265 /AHD/20 16 A.Y. 2012 - 13 PAGE NO UNITY ORGANICS PVT. LTD. VS. DCIT 2 BY PRESUMING THAT THE SAME WERE NOT FURNISHED BEFORE THE ASSESSING OFFICER AT THE LEVEL OF ORIGINAL ASSESSMENT PROCEEDINGS. ALL THE THREE GROUNDS OF APPEAL RELATED TO COMMO N ISSUE THEREFORE DECIDED TOGETHER AS UNDER: - 3. IN THIS CASE, THE BRIEF FACT OF THE CASE IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 55 , 51 , 380/ - WAS FILED ON 26 TH SEP, 2012. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 23 RD SEP, 2013. THE ASSESSEE WAS ENGAGED IN THE BU SINESS OF MANUFACTURING OF DYES AND INTERMEDIATE S . ON SCRUTINY, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS DEBITED INTEREST OF RS. 7 , 92 , 826 ON BORROWED CAPITAL FOR THE PURPOSE OF PURCHASE OF GID C PLOT DAHEJ . ON VERIFICATION OF THE DETAILS FURNISHED BY THE ASSESSEE, IT WAS DISCERNED TO THE ASSESSING OFFICER T HA T ASSESSEE HAS BEEN ALLOTTED P LOT AT DAHEJ INDUSTRIAL ESTATE BY GIDC BUT TH ERE WAS NO SUPPORTING DETAIL T O SUBSTANTIAT E THAT ASSESSEE HA D USED THIS PLOT FOR THE PUR POSE OF BUSINESS . THE TOTAL PRICE OF THE LAND WAS RS. 1,10,45,639/ - AND OUT OF THAT 70% W AS TO BE PAID IN EQUAL INSTALLMENT WITH 15.5% RATE OF INTEREST. THE ASSESSEE FAILED TO SUBSTANTIATE WITH SUPPORTING EVIDENCE THAT PLOT WAS USED FOR THE BUSINESS PURPOSE. THEREFORE, ASESSEE HAS STATED THAT AS PER SECTION 36(1)(III), THE INTEREST IS ONLY ALLOWABLE IF THE CAPITAL IS BORROWED FOR THE PURPOSE OF BUSINESS. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED THE INTEREST OF RS. 7 ,92, 826/ - STATING T H AT ASSESSEE HAS NOT USED THE PLOT ALLOTTED BY GIDC FOR THE PURPOSE OF BUSINESS DURING THE YEAR U NDER CONSIDERATION. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY STATING THAT DEDUCTION U/S. 36(1)(III) CANNOT BE ALLOWED BECAUSE THE ASSESSEE HAS NOT PUT TO USE THE ALLOTTED PLOT OF LAND FOR THE PURPOSE OF BUSINESS DURING THE YEAR UNDER CONSIDERATION. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS SUBMITTED WRITTEN SUBMISSION STATING THAT THE ALTERNATIVE LAND WAS REQUIRED TO BE I.T.A NO. 1265 /AHD/20 16 A.Y. 2012 - 13 PAGE NO UNITY ORGANICS PVT. LTD. VS. DCIT 3 PURCHASED ONLY FO R THE PURPOSE OF ENSURING SHIFTING OF THE BUSINESS OPERATION WITHOUT RESULTING INTO ANY EXTENSION OF THE EXISTING BUSINESS AND SAID LAND WAS PURCHASED FOR COMMERCIAL AND BUSINESS PURPOSE ONLY AND THIS EXPENDITURE WAS RIGHTLY CLAIMED AS ALLOWABLE DEDUCTION WHILE COMPUTING THE INCOME CHARGEABLE TO TAX U/S. 28 OF THE ACT. HE HAS ALSO SUBMITTED PAPER BOOK CONTAINING WRITTEN SUBMISSION FILED BEFORE THE LD. CIT(A) REFERRING JUDICIAL PRONOUNCEMENT OF LUCKNOW ITAT IN THE CASE OF SHARNATH INFRASTRUCTURE LTD. (2009) 12 0 TTJ 216. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT(A). 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER HAS DISALLOWED INTEREST EXPENSES OF RS. 7 , 92 , 826/ - CLAIM ING AS INCURRED TOWARDS CAPITAL BORROWED FOR THE PURPOSE OF PURCHASE OF GIDC PLOT. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS THE ASSESSEE HA D FAILED TO SUBSTANTIATE AS PER PROVISION OF SECTION 36(1)(III) THAT THE PURCHASED ASSET/PLOT WAS USED FOR THE PURPOSE OF BUSINESS. IN SPITE O F GIVING A NUMBER OF OPPORTUNITIES , THE ASSESSEE FAILED TO DEMONSTRATE THE USE OF THE PLOT FOR THE PURPOSE OF BUSINESS AND F AILED TO CONTROVERT THE FINDINGS OF THE LD. CIT(A) . AFTER CONSIDERING THE ABOVE FACTS AND FINDINGS WE OBSERVE THAT THE JUDICIAL PRONOUNCEMENT IN THE CASE OF SARNATH INFRA. PVT. LTD. VS. ACIT OF ITAT LUCKNOW BENCH AS MENTIONED SUPRA IN THIS ORDER IS NOT A PPLICABLE TO THE CASE AS THE FACT S OF THE CASE OF THE ASSESSEE ARE DISTINGUISHABLE FROM THE ABOVE CITED JUDGMENT OF LUCKNOW ITAT. THEREFORE, WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A). ACCORDINGLY , THE APPEAL OF THE ASSESSEE IS DISMISSED. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 06 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNT ANT MEMBER I.T.A NO. 1265 /AHD/20 16 A.Y. 2012 - 13 PAGE NO UNITY ORGANICS PVT. LTD. VS. DCIT 4 AHMEDABAD : DATED 21 /06 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,