M/s. Helio Engineering Private Limited, CHENNAI V. ACIT, CHENNAI

ITA 209/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90495 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: GOPAL KRISHNA RAJU
• Keywords: Capital asset; Depreciation; Proportionate interest; Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A. NO. 209/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010) M/S. HELIO ENGINEERING PRIVATE LIMITED, NO.5, RK SYNDICATE, NEAR SENTHIL NAGAR, KOLATHUR, CHENNAI 600 099. [PAN:AAACH 2368H] ( %& /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(2). CHENNAI 600 034. ( '(%& /RESPONDENT) / APPELLANT BY : SHRI. GOPAL KRISHNA RAJU, C.A / RESPONDENT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. /DATE OF HEARING : 25.05.2015 !' /DATE OF PRONOUNCEMENT : 19.06.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI DA TED 30.09.2013 FOR THE ASSESSMENT YEAR 2009-2010. I.T.A.NO.209/MDS/2014. :- 2 -: 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING DIS ALLOWANCE OF INTEREST OF D8,31,420/- PAID BY ASSESSEE ON THE TER M LOAN, WHICH WAS USED FOR PURCHASE OF PROPERTY WHICH IS YET TO BE PU T INTO USE AS ON 31.03.2009. THE ASSESSING OFFICER DISALLOWED INTER EST AMOUNT OF D8,31,420/- ON THE REASON THAT THE ASSESSEE USED TH E LOAN AMOUNT FOR THE PURCHASE OF LAND WHICH HAS NOT BEEN PUT TO USE . ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE MADE AN ADVANC E OF D84,96,220/- WHICH WAS PAID ON TWO OCCASIONS ON 09.07.2008 AND 1 2.07.2008 AFTER OBTAINING LOAN FROM BANK. THE ASSESSEE PAID BANK I NTEREST OF D9,78,576/-. ON THE PROPORTIONATE INTEREST ON D84,9 6,220/- WHICH WORKS OUT TO D8,31,420/- AS ASSET WAS NOT PUT TO U SE, THE ASSESSING OFFICER CONSIDERED THE EXPENDITURE AS CAPITAL AS SET AND DISALLOWED THE CLAIM. AGGRIEVED, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). ON APPEAL, T HE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF ASSE SSING OFFICER. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL AVAILABLE ON RECORD. THE LD. AUTHORISED REPRESENTAT IVE PLEADED THAT THE ASSESSEE PURCHASED THE LAND AND USED THE SAME FOR T HE PURPOSE OF STORING ITS STOCK IN TRADE. HOWEVER, THE AUTHORIS ED REPRESENTATIVE FOR I.T.A.NO.209/MDS/2014. :- 3 -: ASSESSEE NOT ABLE TO SHOW ANY EVIDENCE REFLECTING D ATE OF PURCHASE OF ABOVE LAND AND ALSO THERE IS NO IOTA OF EVIDENCE PLACED REGARDING STORING OF ASSESSEES STOCK IN TRADE IN THE IMPUGNE D LAND. FURTHER, IN VIEW OF FINANCE ACT, 2003 WHICH WAS BROUGHT OUT AN AMENDMENT W.E.F. 01.04.2004 CONSEQUENT TO WHICH NO DEDUCTION WILL BE ALLOWED IN RESPECT OF ANY AMOUNT OF THE INTEREST PAID, ON CAPI TAL BORROWED FOR ACQUISITION OF AN ASSET FOR EXTENSION OF EXISTING B USINESS OR PROFESSION (WHETHER CAPITALIZED IN THE BOOKS OF ACCOUNT OR NOT ); FOR ANY PERIOD BEGINNING FROM THE DATE ON WHICH THE CAPITAL WAS BO RROWED FOR ACQUISITION OF THE ASSET TILL THE DATE ON WHICH SU CH ASSET, WAS FIRST PUT TO USE. IN OTHER WORDS AS PER SECTION 36(1)(III) OF THE ACT, ANY EXPENDITURE INCURRED IN RELATION TO ACQUIRING A CAP ITAL OR FIXED ASSET IS TO BE CAPITALIZED AND THE ONLY ALLOWABLE DEDUCTION IS BY WAY OF DEPRECIATION OF SUCH CAPITAL ASSETS. HENCE, IN THI S CASE, THERE IS A CATEGORICAL FINDING BY THE COMMISSIONER OF INCOME T AX (APPEALS) THAT THE LAND WAS NOT PUT TO USE UPTO 31.03.2009 AND TH E COST OF THE LAND IS TO BE CONSIDERED AS CAPITAL ASSET ONLY AND THE I NTEREST INCURRED ON THE TERM LOAN, WHICH WAS USED FOR THE PURPOSE OF M AKING ADVANCE FOR PURCHASE OF LAND, IS CAPITAL EXPENDITURE AND IT CAN NOT BE ALLOWED AS REVENUE EXPENDITURE. ACCORDINGLY, THIS GROUND IS DI SMISSED. I.T.A.NO.209/MDS/2014. :- 4 -: 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.209/MDS/2014 IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 19TH DAY OF J UNE, 2015, AT CHENNAI. SD/- SD/- ( . ! ) V. DURGA RAO ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ /CHENNAI. %& /DATED:19.06.2015. KV &' () *) /COPY TO: 1. + APPELLANT 2. / RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. )-. / /DR 6. .0 1 /GF.