M/s. Puri Industries, Muzaffarnagar V. ACIT, Muzaffarnagar

ITA 4485/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98075 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 11-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RASMITA JHA
• Assessee Lawyers: SANDIP KUMAR GARG
• Keywords: Depreciation; Revenue expenditure
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI, JM ITA NO. 4485 /DEL/2012 : ASSTT. YEAR : 200 9 - 10 PURI INDUSTRIES, 7 TH KM J ANSATH ROAD, MUZAFFARNAGAR VS ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE - I , MUZAFFARNAGAR (APPELLANT) (RESPONDENT) PAN NO. A A BFP9669D ASSESSEE BY : SH. SANDIP KUMAR GARG, ADV. REVENUE BY : SMT. RASMITA JHA , SR. DR DATE OF HEARI NG : 11 .12 .2015 DATE OF PRONOUNCEMENT : 15 .12 .2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 04.06.2012 OF LD. CIT(A), MUZAFFARNAGAR . 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS AP PEAL RELATES TO THE CONFIRMATION OF DISALLOWANCE OF RS. 4,16,090/ - MADE BY THE AO ON ACCOUNT OF INTEREST PAID ON LOAN TAKEN ON MACHINE. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF VALVES FOR SUGAR & P APER MACHINERY. THE ASSESSEE FILED THE RETURN OF INCOME ON 30.09.2009 DE CLARING AN INCOME OF RS.81,01,25 0/ - WHICH WAS REVISED ON 08.03.2010 AT AN INCOME OF RS.81,01,000/ - . LATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE AO ITA NO .4485 /DEL /2012 PURI INDUSTRIES 2 NOTICED THAT IN THIS CASE A SURV EY U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CONDUCTED ON 05.02.2009 AND THE ASSESSEE SURRENDERED AN AMOUNT OF RS. 81,00,000/ - FOR VARIATION IN STOCK, EXPENSES , INVESTMENT AND TO COVER ANY FUTURE DISCREPANCIES. THE AO NOT ICED THAT THE ASSESSEE HAD MADE ADDITION IN PLANT & MACHINERY AND HAS CLAIMED INTEREST AMOUNTING TO RS.4,16,090/ - PAID ON THE LOAN TAKEN FOR PURCHASE OF ABOVE MACHINE . THE AO ASKED THE ASSESSEE TO JUSTIFY THE CLAIM. IN RESPONSE, IT WAS STATED THAT THE MACH INE COULD NOT BE USED AND NO DEPRECIATION WAS CLAIMED. IT WAS ALSO STATED THAT THE ASSESSEE IS A G OING CONCERN AND INTEREST WAS A REVENUE EXPENDITURE , SO, IT WAS CLAIMED IN PROFIT AND LOSS ACCOUNT. THE AO, HOWEVER, DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND MADE THE ADDITION. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT INTEREST ON LOAN AMOUNTING TO RS.4,16,090/ - WAS COVERED BY THE SURRENDER MADE AT RS.81,00,000/ - . THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE AO WAS JUSTIFIED IN CAPITALIZING INTEREST ON LOAN AMOUNTING TO RS. 4, 16,090/ - . 5 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO DURING THE COURSE OF SURVEY PROCEEDINGS RECORDED THE STATEMENT OF THE ASSESSEE WHEN THERE WERE CERTAIN D ISCREPANCIES FOUND IN THE STOCK , EXPENSES & INVESTMENT ETC. AND THE ASSE SSEE IN REPLY TO QUESTION NO. 13 (REFERENCE WAS MADE TO PAGE NO. 33 OF THE PAPER BOOK) ITA NO .4485 /DEL /2012 PURI INDUSTRIES 3 CLEARLY STATED THAT ADDITIONAL INCOME OF RS.81 ,00,000/ - WAS SURRENDERED WHICH WILL COVER DISCREPANCIES IN STOCK , EXPENSES, INVESTMENT OR OTHER DISCREPANCIES FOUND. IT WAS FURTHER STATED THAT THE INTEREST ON THE LOAN TAKEN FOR MACHINERY ALTHOUGH WAS TO BE CAPITALIZED AND WAS NOT ALLOWABLE AS REVENUE EX PENDITURE BUT THE SAID AMOUNT WAS COVERED IN THE SURRENDERED AMOUNT OF RS.81,00,000/ - B ECAUSE THE ASSESSEE SPECIFICA LLY STATED THAT THE SURRENDER COVERS THE SHORT COMINGS AND DISCREPANCIES IN THE BOOKS OF ACCOUNTS. 6 . IN HER RIVAL SUBMISSIONS THE LD. DR S UPPORTED THE ORD E RS OF THE AUTHORITIES BELOW . 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT DURING THE COURSE OF SURVEY CERTAIN DISCREPANCIES WERE FOUND IN THE STOCK , EXPENSES AND THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IN THE PRESENT CASE, O NE OF THE DISCREPANCIES IN THE BOOKS OF ACCOUNTS NOTED BY THE AO WAS THAT THE INTEREST ON LOAN TAKEN FOR PURCHASE OF MACHINERY WAS CLAIMED AS REVENUE E XPENDITURE, SO, IT WAS TO BE CAPITALIZED. T HE PARTNERS OF THE ASSESSEE FIRM SURRENDERED A SUM OF RS.81,00,000/ - AND IN REPLY TO QUESTION NO. 13, IN THE STATEMENT RECORDED ON 06.02.2009 DURING THE COURSE OF SURVEY CLEARLY STATED THAT THE SAID SURRENDER WILL COVER DISCREPANCIES IN THE STOCK , EXPENSES , INVESTMENT OR ANY OTHE R IRREGULARITIES FOUND LATER ON. T HE AO HAS ACCEPTED THE SAID ITA NO .4485 /DEL /2012 PURI INDUSTRIES 4 CONDITIONAL SURRENDER, T HEREFORE, WE FIND MERIT IN THIS SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DISCREPANCIES RELATING TO THE NATURE OF THE INTEREST PAID ON LOAN TAKEN FOR PURCHASE OF MACHINERY, WAS COVERED IN THE SURRENDER OF RS.81,00,000/ - . IN THAT VIEW OF THE MATTER , WE DELETE THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A). 8 . IN THE RESULT, TH E APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 15 /12 /2015 ) SD/ - SD/ - (BEENA PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 /12/2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR