ACIT, New Delhi V. M/s A.M. Enterprises, New Delhi

ITA 3699/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74327 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDER

Judgement Text

ITA NO. 3699/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3699/DEL/2011 A.Y. : 2007-08 ACIT, CC-25, ROOM NO. 331, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS. A.M. ENTERPRISES, AMALGAMATING COMPANY OF AMALGAMATING COMPANY M/S SVIL MINES LTD., E-3, 1 ST FLOOR, PHASE-II, MANGOLPURI INDUSTRIAL AREA, DELHI (PAN:-AAKFA3560D) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. RAMESH CHANDER, CIT(DR) ASSESSEE BY : SH. RAJIV SAXENA, ADV. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS-I), NEW DEL HI DATED 24.5.2011 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE ISSUE RAISED IS THAT LD. CIT(A) ERRED IN DE LETING THE ADDITION OF RS. 12,14,796/- MADE BY THE AO. IN THIS CASE AO NOTED THAT THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 18.11.09 WAS ASKED TO BIFURCATE THE INTEREST PAID ON TERM LOAN UTILIZED FOR PURCHASE OF MACHINERIES IN TWO PARTS. FIRST, FOR THE PERIOD PRIOR TO PUTTING THE MACHINERIES TO USE AND SECOND RELATABLE TO THE PERIOD AFTER PUTTING THE MACHINERIES TO USE . NO SUCH BIFURCATION WAS FURNISHED. UNDER THE CIRCUMSTANCES, AO HELD THAT ITA NO. 3699/DEL/2011 2 50% OF THE INTEREST ON TERM LOAN AMOUNTING TO 50% OF RS. 24,29,593/- = RS. 12,14,796/- IS CAPITALIZED AND AD DED TO THE INCOME OF THE ASSESSEE, IN VIEW OF EXPLANATION 8 TO SECTIO N 43(1). 3. UPON ASSESSEES APPEAL LD. CIT(A) OBSERVED THAT DURING THE ASSESSMENT YEAR IN QUESTION I.E. A.Y. 2007-08 THERE IS NO ADDITION UNDER THE HEAD PLANT AND MACHINERY. THUS THE QUEST ION OF ATTRIBUTING THE INTEREST DURING THE PERIOD WHEN TH E MACHINERY WAS NOT IN USE DOES NOT ARISE. FURTHER LD. CIT(A) NOTE D THAT THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF WORK IN PROGRES S, A PERUSAL OF WHICH GOES TO SHOW THAT THE APPELLANT HAS DEBITED A N INTEREST ON TERM LOAN AMOUNTING TO RS. 7,63,746/-. THUS LD. CI T(A) HELD THAT THE APPELLANT HAS NOT DEBITED ANY INTEREST IN THE P&L ACCOUNT ON THE TERM LOAN PERTAINING TO THE PERIOD TO THE INSTALLAT ION OF PLANT AND MACHINERY. AS SUCH THE ADDITION OF RS. 12,14,796/- WAS DELETED BY THE LD. CIT(A). 4. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE REITERATED BEFORE US THAT THE CONCERNED MACHINERY WAS NOT PURCHASED DURING THE YEAR AND IT WAS COMING FROM THE PREVIOUS YEAR. IN THIS REGARD, LD. COUNSE L REFERRED TO THE WRITTEN DOWN VALUE OF PLANT AND MACHINERY AT THE CLOSE OF PREVIOUS YEAR AND THE OPENING BALANCE OF THE PLANT AND MACHINERY FOR CURRENT YEAR. THIS SHOWED THAT CLOSING BALA NCE OF LAST YEAR HAS BEEN TAKEN AS OPENING BALANCE OF CURRENT YEAR AND T HERE IS NO ADDITION DURING THE YEAR. UNDER THE CIRCUMSTANCE S, ASSESSEES PLEA IS ACCEPTABLE. THERE IS NO ADDITION UNDER TH E HEAD PLANT AND MACHINERY DURING THE YEAR. HENCE, THE QUESTION OF ATTRIBUTING THE INTEREST DURING HE PERIOD WHEN THE MACHINERY WAS NO T IN USE DOES ITA NO. 3699/DEL/2011 3 NOT ARISE. IN THESE CIRCUMSTANCES, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, WE AFFIRM TH E SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/3/2014. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 14/3/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 3699/DEL/2011 4