P.N.S.Educational Trust, Kendrapada V. ACIT, Cuttack

ITA 279/CTK/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7598 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY CHARAN ROUT
• Keywords: Capital asset; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.279 /CTK/2015 ASSESSMENT YEAR : 2010 - 2011 P.N.S. EDUCATIONAL TRUST, MARSHAGHAI, KENDRAPARA - 754213 VS. ACIT, CIRCLE - 1(2), CUTTACK PAN/GIR NO. AABTP 2454 Q (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI ABHAY CHARAN ROUT , DR DATE OF HEARING : 21 /10 / 2016 DATE OF PRONOUNCEMENT : 21 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 27.2.2015 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY SPEED POST, WHICH WAS SERVED ON THE ASSESSEE ON 18.10.2016 AS EVIDENCED BY TRACK CONSIGNMENT OF INDIA POST. WHEN THE CASE WAS CALLED FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION OF ADJOURNMENT WAS FILED. THE 2 ITA NO.279/CTK/2015 ASSESSMENT YEAR :2010 - 2011 BENCH WAS OF THE VIEW THAT THE APPEAL CAN BE DISPOSED OFF IN THE ABSENCE OF THE ASSESSEE AFTER CONSIDERING THE MATERIALS AVAILABLE ON R ECORD AND ON THE BASIS OF SUBMISSI ONS OF LD D.R. THEREFORE, THE B ENCH PROCEED ED TO DISPOSE OF THE APPEAL EXPARTE QUA - THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME SHOWING LOSS OF RS.2,05,35,762/ - . THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE DURING THE YEAR HAS PAID RS.49,04,397/ - AS INTEREST ON TERM LOAN TO STATE BANK OF INDIA, KENDRAPARA BRANCH FOR CONSTRUCTION OF COLLEGE BUILDING, PURCHASE OF LABORATORY AND WORKSHOP EQUIPMENTS, GENERATOR AND OFFICE EQUIPMENTS, LIBRARY BOOKS AND AICTE APPROVAL FEES. THE ASSESSING OFFICER OBSERVED THAT THE INTEREST EXPENDITURE WAS INCURRED ON SOME BORROWED FUNDS FOR ACQUISITION OF CAPITAL ASSETS AND, THEREFORE, IT WAS CAPITAL EXPENDITU RE AND DISALLOWED THE DEDUCTION OF RS.49,04,397/ - . 4. ON APPEAL, THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE THE LD CIT(A), THE ASSESSEE CLAIMED THAT THE CAPITAL ASSETS PURCHASED BY THE ASSESSEE OUT OF BORROWED FUNDS WERE PUT TO USE IN THE PRESENT ASSESSMENT YEAR UNDER APPEAL AND, THEREFORE, IN VIEW OF PROVISIONS OF SECTION 36(1)(III) OF THE ACT, THE INTEREST EXPENDITURE WAS ALLOWABLE DEDUCTION AS REVENUE EXPENDITURE. IT WAS ALSO CLAIMED BEFORE THE LD CIT(A) 3 ITA NO.279/CTK/2015 ASSESSMENT YEAR :2010 - 2011 THAT THE INTEREST ON TERM LOAN OF RS.49,04,397/ - WAS PAID TO THE BANK BEFORE 31.3.2010 AND AS PER PROVISIONS OF SECTION 43B(E) OF THE ACT, THE SAME WAS ALLOWABLE DEDUCTION ON ACTUAL PAYMENT BASIS. 6. WHEN QUESTIONED BY THE BENCH ON THE ABOVE SUBMISSIONS OF THE ASSESSEE BEFORE THE LD CTT(A), LD D.R. COULD NOT GIVE ANY REPLY TO THE SAME. IT IS OBSERVED FROM THE ORDER OF THE LD CIT(A) THAT WHILE CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN DISALLOWING THE INTEREST OF RS. 49,04,397/ - , THE LD CIT(A) HAS ALSO NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND HAS NOT GIVEN ANY REASON IN HIS ORDER FOR NOT ACCEPTING THE SAME. THUS, THE SUBMISSIONS OF THE ASSESSEE REMAINED UNCONTROVERTED. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE DEDUCT ION OF INTEREST ON TERM LOAN OF RS.49,04,397/ - UTILISED BY THE ASSESSEE FOR ACQUISITION OF ASSETS PUT TO USE IN THE YEAR IS ALLOWABLE AS DEDUCTION AS A REVENUE EXPENDITURE WHILE COMPUTING THE INCOME OF THE ASSESSEE IN TERMS OF PROVISO TO SECTION 36(1)(III) OF THE INCOME TAX ACT, 1961 AND AS PER THE PROVISIONS OF SECTION 43B(E) OF THE ACT. I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DIRECT THE AO TO ALLOW DEDUCTION OF RS.49,04,397/ - ON ACCOUNT OF INTEREST PAYMENT TO STATE BANK OF INDIA ON TE RM LOAN TAKEN BY THE ASSESSEE. HENCE, GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 4 ITA NO.279/CTK/2015 ASSESSMENT YEAR :2010 - 2011 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 21 /10 /2016 . ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 21 /10 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : P.N.S. EDUCATIONAL TRUST, MARSHAGHAI, KENDRAPARA - 754213 2. THE RESPONDENT. ACIT, CIRCLE - 1(2), CUTTACK 3. THE CIT(A), CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//