The ACIT, Circle-3, Baroda V. Ishan Dyes & Chemicals, Borsad

ITA 2712/AHD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6605 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-04-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 08-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: B T THAKKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.2712/AHD/2006 A. Y.: 2002-03 THE A. C. I. T., CIRCLE-3, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA VS ISHAN DYES AND CHEMICALS LTD., DINSHAW CHAMBERS, BARODA (APPELLANT) (RESPONDENT) APPELLANT BY SHRI C. K. MISHRA, DR RESPONDENT BY SHRI B. T. THAKKAR, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY REVENUE IS DIRECTED AGAINST ORDER OF THE CIT(A)-I, BARODA DATED 12-09- 2006 FOR ASSESSMENT YEAR 2002-03 CHALLENGING THE ORDER OF THE LEARNED C IT(A) IN ALLOWING DEDUCTION OF INTEREST PAID ON BORROWED MONEY FOR P URCHASE OF PLANT AND MACHINERY WHICH HAVE NOT YET BEEN PUT TO USE FOR TH E PURPOSE OF BUSINESS. 2. THE LEARNED CIT(A) CONSIDERING THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ASSOCIATED FIBRE & RUB BER INDUSTRIES LTD. 236 ITR 471 (SC) HELD THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. IT WAS HELD IN THE ABOVE DECISION THAT EVEN THOUGH THE MACHINERY HAS NOT BEEN ACTUALLY USED IN THE BUSINESS THE SAME HAS BEEN TREATED AS BUSINESS ASSETS AND IT WAS PURCHASED ONLY FOR TH E PURPOSE OF THE BUSINESS. IT IS STATED IN THE GROUNDS OF APPEAL THAT AMENDME NT MADE TO SECTION 36(1) (III) OF THE IT ACT BY INSERT ING THE PROVISO IS CLARIFICATORY IN NATURE AND DEDUCTION CANNOT BE ALL OWED UNLESS THE ASSETS WAS FIRST PUT TO USE. ITA NO.2712/AHD/2007 ISHAN DYES & CHEMICALS LTD. 2 3. THE LEARNED DR CONCEDED THAT THE ISSUE IS COVERE D BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ASSOCIA TED FIBRE & RUBBER INDUSTRIES LTD. (SUPRA) IN FAVOUR OF THE ASSESSEE. THE PROVISO TO SECTION 36(1) (III) OF THE IT ACT HAS BEEN INSERTED IN THE ACT BY FINANCE ACT 2003 WITH EFFECT FROM 1 ST APRIL 2004. SINCE IT IS SPECIFICALLY MENTIONED IN THE ACT THAT PROVISO IS APPLICABLE WITH EFFECT FROM 1 ST APRIL 2004, THEREFORE, THE PROVISO WOULD NOT BE APPLICABLE TO THE ASSESSME NT YEAR UNDER APPEAL I.E. 2002-03. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). WE CONFIRM HIS FINDING AND DISMISS THE APPEAL OF THE REVENUE. 4. AS A RESULT, THE DEPARTMENTAL APPEAL STANDS DISM ISSED. ORDER PRONOUNCED ON 09-04-2010 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 09- 04-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD