DCIT (OSD) 1(1), MUMBAI V. HERRENKNECHT INIDA P.LTD, MUMBAI

ITA 2994/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3810 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 04-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: IN CIRCUMSTANCES OF CA SE
• Keywords: Revenue expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.2994/MUM/14 ( / ASSESSMENT YEAR: 2008-09) DCIT 1(1) ROOM NO.579, AAYAKAR BHAVAN, MUMBAI - 400020 / VS. M/S. HERRENKNECHT INDIA PVT. LTD. READY MONEY MANSION, 43, VEER NARIMAN ROAD, FORT, MUMBAI - 400001 ./ ./ PAN/GIR NO. : AABCH8691J ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 28.04.2016 !' /DATE OF PRONOUNCEMENT: 10.08.2015 #$ / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 28.02.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 1, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y. 2008-09. 2. THE REVENUE HAS RAISED THE FOLLOWING ISSUE: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE INTERE ST ASSESSEE BY: SHRI VIPUL JOSHI DEPARTMENT BY: SHRI RAJENDRA CHANDEKAR ITA NO.2994/M/14 A.Y. 2008-09 2 & FINANCE EXPENSES OF RS.98,31,527/- CLAIMED BY THE ASSESSEE ON LOAN TAKEN FOR PURCHASE OF LAND. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED ITS RETURN OF INCOME ELECTRONICALLY ON 30.09.2008 DECLARING TOTAL INCOME TO THE TUNE OF RS.NIL. THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). NOTICE U/S.143(2) OF THE AC T DATED 06.08.2009 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 13.08.2009. THEREAFTER, A FRESH NOTICE U/S.143(2) OF THE ACT DATED 17.06.2010 WAS A LSO ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TUNNEL BORING MACHINES AND RELATED SERVICES. THE ASSESSING OFFICE R FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE OBSERVED THAT THE ASS ESSEE HAS INCURRED EXPENSES OF RS.98,31,527/- UNDER THE HEAD INTEREST AND FINANCE CHARGES WHICH INCLUDES INTEREST ON LOANS FROM BANKS OF RS.9 6,20,747/- AND BANK CHARGES OF RS.2,10,780/-. IT WAS FOUND FROM THE BA LANCE SHEET THAT THE ASSESSEE HAS ACQUIRED LAND WORTH RS.22,77,80,820/-. THE LAND WAS ACQUIRED ON 18.01.2008. THE ASSESSING OFFICER DEALT THE ASS ET IN THE NATURE OF CAPITAL THEREFORE DISALLOWED THE INTEREST EXPENSES AMOUNTIN G TO RS.98,31,527/- .ASSESSEE FILED AN APPEAL BEFORE CIT(A) MUMBAI WHO ALLOWED THE SAME THEREFORE THE REVENUE HAS FILED THE PRESENT APPE AL BEFORE US. ISSUE NO.1:- 4. UNDER THIS ISSUE THE REVENUE HAS RAISED THE ALLO WANCE OF THE EXPENDITURE ON ACCOUNT OF INTEREST AND FINANCE EXPE NSES TO THE TUNE OF RS.98,31,527/-. THE LEARNED REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE CIT(A) DID NOT GIVE ANY FINDING WITH REGARD TO THE FACT THAT THE ASSESSEE HAS STARTED THE BUSINESS IN THIS YEAR OR NOT, THERE FORE, IN THE SAID ITA NO.2994/M/14 A.Y. 2008-09 3 CIRCUMSTANCES THE FINDING OF THE CIT(A) IS AMBIGUOU S WHICH CAN NOT BE TREATED AS JUSTIFIABLE IN ACCORDANCE WITH LAW. ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CIT(A) HAS GIVEN THE FINDING IN ACCORDANCE WITH LAW, SPECIFICALLY IN VIE W OF THE LAW SETTLED IN INDIA CEMENTS VS. CIT [060-ITR 052-SC] AND BOMBAY S TEAM NAVIGATION CO. (1953) PRIVATE LTD. VS. CIT [056-ITR-052-SC). THEREFORE, IN THE SAID CIRCUMSTANCES THE APPEAL OF THE REVENUE IS LIABLE T O BE DISMISSED. WITH DUE REGARDS TO THE CONTENTION RAISED BY THE LEARNED REP RESENTATIVE OF THE PARTIES AND PERUSING THE RECORD CAREFULLY, WE CAME TO KNOW THAT THE ASSESSING OFFICER DID NOT GIVE ANY FINDING WITH REGARD TO THE INITIATION OF THE BUSINESS IN THE RELEVANT ASSESSMENT YEAR. IT IS NOT IN DISP UTE THAT THE ASSESSEE HAS ACQUIRED LAND WORTH RS.22,77,80,820/- AND ASSESSEE CLAIMED THE INTEREST THEREON IN THE NATURE OF REVENUE EXPENDITURE. THE ASSESSEE HAS ENGAGED IN THE BUSINESS OF TUNNEL BORING MACHINES AND RELATED SERVICES, NO DOUBT FOR THE INITIATION OF THE SAID BUSINESS THE CAPITAL AMOUNT IS REQUIRED TO BE EXPENDED. THERE IS NO DISPUTE WITH REGARD TO THE LAW RELIED B Y THE LEARNED REPRESENTATIVE OF THE ASSESSEE IS CONCERNED, BUT W E ARE OF THE VIEW THAT IT IS NECESSARY ON THE PART OF THE AO TO RECORD THE FACT ABOUT THE COMMENCEMENT / SET UP OF THE BUSINESS OF THE ASSESSEE I.E IN WHICH YEAR ASSESSEE COMMENCED THE BUSINESS. THEREFORE, IN VIEW OF THE SAID CIRCU MSTANCES WE ARE OF VIEW THAT THE FINDING GIVEN BY THE CIT(A) IS NOT LIABLE TO BE SUSTAINED IN THE EYES OF LAW, THEREFORE WE SET ASIDE THE ORDER ON THIS IS SUE AND DIRECT THE AO TO RECORD THE REASON IN THIS REGARD AND TO DISPOSE THE APPEAL IN ACCORDANCE WITH LAW SPECIFICALLY IN VIEW OF THE OBSERVATIONS MADE A BOVE. ACCORDINGLY THE APPEAL OF THE REVENUE IS HEREBY ALLOWED FOR STATIST ICAL PURPOSE ACCORDINGLY. ITA NO.2994/M/14 A.Y. 2008-09 4 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 10 TH AUGUST , 2016. SD/- SD/- (D.KARUNAKARA RAO) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 10 TH AUGUST, 2016 MP MP MP MP !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. !' ) / BY ORDER, - & //TRUE COPY// */)+ , (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI