Appeal details
Counselvise Citation
[2024] 100 COUNSELVISE.COM (IT) 3061 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-04-2024
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
31-03-2024
Assessment Year
2015-2016
Appeal Filed On
23-08-2023
Judgement Text
आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘ बी ’, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद । ।। । IN THE INCOME TAX APPELLATE TRIBUNAL “ B ” BENCH, AHMEDABAD ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.644/Ahd/2023 Assessment Year : 2015-16 The DCIT Central Circle-3 Vadodara Vs BTW Atlanta Transformers India Pvt.Ltd. 3 rd Floor, Shreeji Complex Vasana Bhaili Road Opp. Taksh Complex Vadodara – 390 015 PAN:AAECB 9579 N ी / (Appellant) / (Respondent) Assessee by : Shri Dhanesh Bafna & Shri Amol Mahajan, CA Revenue by : Shri Sudhendu Das, CIT-DR /Date of Hearing : 01/04/2024 /Date of Pronouncement: 10/04/2024 आदेश/O R D E R PER MS. SUCHITRA KAMBLE, JUDICIAL MEMBER This appeal is filed by the Department against the order dated 16/06/2023 passed by the Commissioner of Income-tax (Appeals)-12, Ahmedabad [“CIT(A)” in short] for Assessment Year (AY) 2015-16. 2. Grounds of appeal taken by the Department are as under: ITA No. 644/Ahd/2023 BTW Atlanta Transformers India Pvt.Ltd. vs. DCIT Asst.Year 2015-16 2 “1) On the facts and in the circumstance of the case and in law, the Ld.CIT(A) has erred in allowing the claim of interest income of Rs.3,40,38,900/- holding that the same are as capital receipts and ignoring the fact that interest income of FDs is assessable under the head ‘income from other sources’ as held by the Hon’ble Supreme Court in the case of CIT Vs. Autokast Ltd. [2001] 116 Taxman 244 (SC) and despite the fact that the assessee itself declared the interest income as taxable income in the return of income. 2) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in following the order of the ITAT without considering the fact that the assessee has not show any nexus between the funds borrowed and the specific investment to be made of it, retaining it to be in the nature of surplus funds. 3) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made. On the facts and in the circumstances of the case and in law, the Ld.CIT(A)-12, Ahmedabad ought to have upheld the order of the Assessing Officer. 4) It is, therefore, prayed that the order of the ld.CIT(A) may be set aside and that the Assessing Officer may be restored to the above extent.” 3. The brief facts of the case are that the assessee-company filed its return of income for Asst.Year 2015-16 on 30/09/2015 declaring total income under normal provisions at Rs.1,73,64,470/- and Book Profit u/s.115JB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) of Rs.1,95,34,645/-. The case was selected for scrutiny assessment and a notice u/s.143(2) and u/s.142(1) of the Act was issued on 19/09/2016. Further, on change of incumbent notice u/s.142(1) r.w.s.129 of the Act was issued on 28/06/2017 calling for details. The assessment was completed u/s.143(3) on 29/11/2017, wherein the Assessing Officer computed the ITA No. 644/Ahd/2023 BTW Atlanta Transformers India Pvt.Ltd. vs. DCIT Asst.Year 2015-16 3 total income of Rs.3,18,68,730/- and book profit u/s.115JB of the Act of Rs.1,95,34,645/-. 4. Being aggrieved by the assessment order, the assessee filed the appeal before the Ld.CIT(A). The Ld.CIT(A) partly allowed the appeal of the assessee. 5. The Ld.DR submitted that the assessee-company had itself shown the interest income of Rs.3,40,38,900/- on FDs as taxable in its return of income. Under the circumstances, it was not proper for the Ld.CIT(A) to hold that the said “interest income” was in the nature of “capital receipt”. 6. The Ld.AR submitted that an identical issue was involved in assessee’s own case for AYs 2013-14 & 2014-15 and the Ld.ITAT Ahmedabad Bench “B” had held in ITA Nos.1642 & 1643/Ahd/2018 vide order dated 06/03/2020 that the interest income earned on Fixed Deposits pertaining to prior period commencement of business of the assessee should be treated as “capital receipt”. Thus, the issue is squarely covered in favour of assessee by the earlier decision of the Tribunal. 7. We have carefully considered the submissions of both the sides. It is found that an identical issue was involved in the appellant’s own case for the AYs 2013-14 & 2015-16 before the Tribunal, which was decided in favour of assessee vide order dated 06/03/2020(supra). The operative part of the said order is as under: ITA No. 644/Ahd/2023 BTW Atlanta Transformers India Pvt.Ltd. vs. DCIT Asst.Year 2015-16 4 “In the light of the above facts and after considering the various judicial pronouncements of the Hon’ble High Courts and Co-ordinate Benches of the ITAT as cited above, we consider that the impugned interest receipt by the assessee company is related to the prior period to commencement of business which is in nature of capital receipt and was required to be set off against pre-operative expenses. Therefore, first ground of appeal of the assessee for treating expenses to the amount of Rs.2,33,36,037/- as revenue expenditure is dismissed. However, the alternative ground of appeal of the assessee for treating the interest income earned on fixed deposit pertaining to prior period commencement of business is allowed by treating the impugned interest income as capital receipt which is adjusted against pre-operative expenses of the assessee. Therefore, the alternative ground of appeal of the assessee is allowed.” 7.1. There is no dispute to the fact that the business activities of the assessee-company had not commenced in the FY 2014-15 as well. The Assessing Officer has given a categorical finding, in this regard, in the assessment order itself. Thus, the interest earned on FDs during the year was prior to commencement of business of the assessee-company and was in the nature of “capital receipt” as held in the assessee’s own case in the AYs 2013-14 & 2014-15. The objection of the Department is that the assessee had not shown any nexus between the funds borrowed and the specific investment made by it, is not found relevant as such nexus has to be examined in the year in which the investments were made for the first time. In the present case, the investments were made in the earlier years that is continuing in the current year and the assessee-company is deriving interest income on the Fixed Deposits made by it in the earlier years. Respectfully following the decision of the Co-ordinate Bench in the AYs 2013-14 & 2014- 15, we hold that the interest income earned on Fixed Deposits pertaining to the prior period commencement of business was in the nature of “capital receipt”. As held in that year the preoperative expenses of the assessee has to be adjusted with this “capital receipt” and only the balance expense, if ITA No. 644/Ahd/2023 BTW Atlanta Transformers India Pvt.Ltd. vs. DCIT Asst.Year 2015-16 5 any, need to be amortized as per provisions of Section 35D of the Act. Accordingly, the Ld.CIT(A) had rightly allowed the claim of the assessee. 8. In the result, the appeal filed by the Department is dismissed. Order pronounced in the Court on 10 th April, 2024 at Ahmedabad. Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad, Dated 10/04/2024 . ी. य , . . ./T.C. NAIR, Sr. PS ! "# /Copy of the Order forwarded to : 1. "!ी $% / The Appellant 2. &य$% / The Respondent. 3. '(')* य य + / Concerned CIT 4. य य + )"!ी (/ The CIT(A)-12, Ahmedabad 5. . /ीय )* , य "!ी य ")* , ज /DR,ITAT, Ahmedabad, 6. / 12 3 /Guard file. / BY ORDER, &य ! &य ! //True Copy// // //Tr ह य !'जी (Asstt. Registrar) य "!ी य ")* , ITAT, Ahmedabad 1. Date of dictation (dictation pad attached with the duplicate file) : 03/08.04.2024 2. Date on which the typed draft is placed before the Dictating Member. : 03/04/08.04.2024 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 10.4.2024 7. Date on which the file goes to the Bench Clerk. : 10.4.2024 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :
