ACIT, Erode V. Supreme Poultry (P) Ltd., Erode

ITA 2515/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3973 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 29-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Keywords: Revenue expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2515/MDS/2016 ' (' / ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, NO.15, GANDHIJI ROAD, ERODE 638 001. V. M/S SUPREME POULTRY (P) LIMITED, H-108, PERIYAR NAGAR, ERODE 638 001. PAN : AACCS 9488 B (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. P. RADHAKRISHNAN, JCIT ,-*+ . / / RESPONDENT BY : NONE 0 . 1# / DATE OF HEARING : 29.06.2017 23( . 1# / DATE OF PRONOUNCEMENT : 27.07.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 3, COIMB ATORE, DATED 27.05.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THIS APPEAL WAS FIXED FOR HEARING ON 06.12.2016. SINCE ON ONE APPEARED, IT WAS ADJOURNED TO 14.03.2016. ON 1 4.03.2016 ALSO NO ONE APPEARED FOR THE ASSESSEE. THE APPEAL WAS A DJOURNED TO 2 I.T.A. NO.2515/MDS/16 25.04.2017 AND NOTICE WAS ISSUED BY RPAD. ON 25.04 .2017 ALSO NO ONE APPEARED FOR THE ASSESSEE AND THE REGISTRY H AS PLACED ON RECORD AN ADJOURNMENT APPLICATION SAID TO BE RECEIV ED FROM AN ADVOCATE. EVEN THOUGH THE ASSESSEE HAD NOT GIVEN A NY VAKALAT TO THE ADVOCATE AND THE ADVOCATES NAME WAS ALSO NOT M ENTIONED IN THE ADJOURNMENT PETITION, THIS TRIBUNAL AGAIN ADJOU RNED THE MATTER TO 29.06.2017. 3. WHEN THE APPEAL WAS TAKEN UP FOR HEARING ON 29.0 6.2017, NO ONE APPEARED FOR THE ASSESSEE. THE NOTICE OF HE ARING WAS ALSO SERVED ON THE ASSESSEE BY RPAD AND THE REGISTRY HAS PLACED ON RECORD THE POSTAL ACKNOWLEDGEMENT AS PROOF OF SERVI CE OF NOTICE. ON 29.06.2017 ALSO A SIMILAR ADJOURNMENT PETITION W AS RECEIVED SIGNED BY AN ADVOCATE WITHOUT MENTIONING HIS NAME I N THE APPLICATION. THIS TIME ALSO NO VAKALAT WAS FILED B Y THE SAID ADVOCATE WHO FILED THE ADJOURNMENT PETITION. SINCE THE NAME OF THE ADVOCATE WAS NOT DISCLOSED IN THE ADJOURNMENT PETIT ION AND THE ASSESSEE HAS ALSO NOT GIVEN ANY VAKALAT TO ANY ADVO CATE, THIS TRIBUNAL CONSIDERED THE ADJOURNMENT PETITION FILED BY THE SO-CALLED ADVOCATE IS UNAUTHORIZED, THEREFORE, THE SAME WAS R EJECTED. 3 I.T.A. NO.2515/MDS/16 ACCORDINGLY, THIS TRIBUNAL PROCEEDED TO HEAR THE LD . DEPARTMENTAL REPRESENTATIVE AND DISPOSE OF THE APPEAL ON MERIT. 4. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS DISALLOWANCE OF INTEREST ON THE LOAN BORROWED BY TH E ASSESSEE FOR SETTING UP OF POULTRY UNIT AT KODANTHUR. ACCORDING TO THE LD. D.R., THE ASSESSEE IS IN THE BUSINESS OF POULTRY. IN ORD ER TO SET UP A NEW UNIT AT KODANTHUR, THE ASSESSEE BORROWED A SUM OF ` 3 CRORES FROM BANK. THE ASSESSEE CLAIMED THE INTEREST ON THE ABO VE SAID LOAN OF ` 3 CRORES AS REVENUE EXPENDITURE WHILE COMPUTING THE TOTAL INCOME. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COULD NOT SET UP THE NEW UNIT AT KODANTHUR DUE TO OBJECTION RAISED BY TH E LOCAL PEOPLE AND THE PROJECT WAS SHIFTED TO SEMUR. EVEN AT SEMU R, THE PROJECT WAS NOT COMPLETED AND THE POULTRY UNIT WAS NOT PUT TO USE, THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE INTEREST EXPENDITURE HAS TO BE CAPITALIZED IN VIEW OF PROVIS O TO SECTION 36(1)(III) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'T HE ACT'). 4 I.T.A. NO.2515/MDS/16 5. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT THE CIT(APPEALS) FOUND THAT THE ASSESSEE COMPLETED THE CONSTRUCTION OF POULTRY UNIT AND PUT TO USE THE SAM E, THEREFORE, HE ALLOWED THE CLAIM OF THE ASSESSEE. ON A QUERY FROM THE BENCH, HOW THE CIT(APPEALS) CAME TO A CONCLUSION THAT THE COST OF CIVIL CONSTRUCTION WAS ` 24,32,642/- AND COST OF NON-CIVIL WAS ` 3,28,15,415/-? THE LD. D.R. SUBMITTED THAT IT IS N OT KNOWN HOW THE CIT(APPEALS) CAME TO KNOW THESE DETAILS. THE LD. D .R. SUBMITTED THAT NOTHING IS AVAILABLE ON RECORD. 6. WE HAVE CONSIDERED THE SUBMISSION OF THE LD. DEP ARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE O N RECORD. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT C ONSTRUCTED THE POULTRY UNIT DURING THE YEAR UNDER CONSIDERATION, T HEREFORE, THE INTEREST ON BORROWED FUNDS OF ` 3 CRORES CANNOT BE ALLOWED AS REVENUE EXPENDITURE. HOWEVER, THE CIT(APPEALS) FOU ND THAT THE POULTRY WAS SET UP BEFORE THE FINANCIAL YEAR AND TH E SAME WAS PUT TO USE AND ACCORDINGLY, HE ALLOWED THE CLAIM OF THE AS SESSEE. THE CIT(APPEALS) FOUND THAT THE CIVIL CONSTRUCTION COST WAS ` 24,32,642/- AND NON-CIVIL COST WAS ` 3,28,15,415/-. IT IS NOT KNOWN FROM WHERE THE CIT(APPEALS) GOT THIS FIGURE. THEREFORE, THIS TRIBUNAL IS OF THE 5 I.T.A. NO.2515/MDS/16 CONSIDERED OPINION THAT THE MATTER NEEDS TO BE VERI FIED. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW AR E SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER A FRESH AND FIND OUT THE EXACT COST INCURRED BY THE ASSESSEE ON CIVI L CONSTRUCTION AND NON-CIVIL AND ALSO FIND OUT WHETHER THE POULTRY SHE DS WERE CONSTRUCTED ACTUALLY AND PUT TO USE AND, THEREAFTER , DECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE O PPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 27 TH JULY, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 27 TH JULY, 2017. KRI. . ,167 87(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 91 () /CIT(A)-3, COIMBATORE 4. PRINCIPAL CIT- 2, COIMBATORE 5. 7: ,1 /DR 6. ;' < /GF.