Borole Education Pvt. Ltd., Jalgaon V. ITO, Ward 2(1), Jalgaon

ITA 751/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6779 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S C SARANGI
• Assessee Lawyers: S N KALBHANDE
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.751/PN/2013 (ASSESSMENT YEAR : 2006-07) BOROLE EDUCATION PVT. LTD., DESHMUKH PLAZA, KHWAJAMIYA ROAD, GANESH COLONY, JALGAON 425 001. PAN : AACCB5416G . APPELLANT VS. INCOME TAX OFFICER, WARD 2(1), JALGAON. . RESPONDENT ASSESSEE BY : MR. S. N. KALBHANDE DEPARTMENT BY : MR. S. C. SARANGI DATE OF HEARING : 09-07-2014 DATE OF PRONOUNCEMENT : 25-07-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK DATED 22.02.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 19.1 2.2008 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL, THE FIRST ISSUE RAISED IS WITH R EGARD TO INTEREST EXPENDITURE OF RS.12,82,410/- WHICH HAS BEEN DISALLOWED ON ACCO UNT OF PROVISO TO SECTION 36(1)(III) OF THE ACT. 3. IN BRIEF, THE FACTS ARE THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF COMPUTER INSTITUTE AND DATA PROCESSING. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE COMPANY FILED A RETURN OF I NCOME ON 13.11.2006 DECLARING TOTAL INCOME OF RS.2,16,715/-. IT WAS NO TICED BY THE ASSESSING OFFICER THAT ASSESSEE HAD CLAIMED DEDUCTION OF RS.1 2,82,410/- REPRESENTING ITA NO.751/PN/2013 A.Y. : 2006-07 INTEREST EXPENDITURE IN RESPECT OF LOANS TAKEN FROM VARAD URBAN CO-OP CREDIT SOCIETY AND UCO BANK. THE LOAN AMOUNTS WERE UTILIZ ED FOR PURCHASE OF LAND AT UMALE, JALGAON AND CONSTRUCTION OF A BUILDING TH EREON. THE ASSESSING OFFICER CAME TO CONCLUDE THAT THE BUILDING WAS STIL L UNDER CONSTRUCTION STAGE AND AS THE IMPUGNED INTEREST WAS PAID FOR THE PERIO D PRIOR TO THE ASSET HAVING BEEN PUT TO USE FOR BUSINESS ACTIVITY, THE SAME WAS DISALLOWABLE IN TERMS OF THE PROVISO TO SECTION 36(1)(III) OF THE ACT. IN T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ALSO HELD THAT T HE BUILDING PREMISES WERE NOT FIT FOR UTILIZATION DURING THE YEAR UNDER CONSI DERATION. EXCEPT FOR STATING THAT ASSESSEE COMPANY HAD OCCUPIED A PORTION OF THE INCOMPLETE BUILDING FOR ITS BUSINESS ACTIVITY FROM OCTOBER, 2005 ONWARDS, N O DOCUMENTARY EVIDENCE WAS FURNISHED BY ASSESSEE TO SUBSTANTIATE THE CLAIM THAT THE BUILDING WAS PUT TO USE. EVEN BEFORE THE CIT(A), ASSESSEE CLAIMED T HAT A PORTION OF THE BUILDING WAS OCCUPIED BY IT FROM OCTOBER, 2005 ONWA RDS AND IT WAS, THUS, PUT TO USE. THE CIT(A), HOWEVER, DISAGREED WITH THE AS SESSEE AND HELD THAT THE BUILDING WAS NOT ONLY INCOMPLETE BUT ALSO UNFIT TO BE OCCUPIED AND THEREFORE, ACCORDING TO HIM, THE INTEREST EXPENSE WAS CORRECTL Y DISALLOWED BY THE ASSESSING OFFICER. AGAINST SUCH A DECISION OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ELECTRICITY AND TELEPHONE BILLS WERE FURNISHED BEFO RE THE CIT(A) TO SHOW THAT THE BUILDING WAS ACTUALLY PUT TO USE PARTIALLY DURI NG THE YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT NON-OBTAINING OF A COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY DOES NOT DIS-PROVE ASSES SEES PLEA THAT A PORTION OF THE BUILDING WAS COMPLETE AND PUT TO USE DURING THE YEAR UNDER CONSIDERATION ITSELF. ITA NO.751/PN/2013 A.Y. : 2006-07 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS JUSTIFIED THE ACTION OF THE LOW ER AUTHORITIES ON THE GROUND THAT THERE WAS NO MATERIAL TO SUBSTANTIATE THE PLEA OF THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. OSTENSIBLY, THE CIT(A) HAS UPHELD THE ACTION OF THE ASSESSING OFFIC ER PRIMARILY ON THE GROUND THAT THERE WAS NO EVIDENCE TO SUPPORT THE ASSERTION OF THE ASSESSEE THAT A PORTION OF THE BUILDING WAS PUT TO USE DURING THE Y EAR UNDER CONSIDERATION. IN- FACT, IN COMING TO SUCH CONCLUSION, THE CIT(A) HAS DISCUSSED THE ISSUE AS UNDER :- 9. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER, DIRECTOR'S STATEMENT RECORDED DURING SURVEY, MATERI AL (BILLS) FURNISHED BY THE APPELLANT IN SUPPORT OF ITS CLAIM AND OTHER MAT ERIAL ON RECORD. THERE IS NO DISPUTE THAT THE BUILDING UNDER CONSIDERATION WA S STILL IN CONSTRUCTION STAGE DURING THE PERIOD UNDER REFERENCE. THIS FACT HAS BEEN REINFORCED BY THE DIRECTOR OF THE COMPANY IN HIS STATEMENT RECORD ED DURING SURVEY. THE APPELLANT HAS FAILED TO FURNISH ANY CREDIBLE DOCUME NT WHICH COULD REALLY ESTABLISH THAT THE BUILDING WAS PUT TO USE. IT WAS INFACT NOT EVEN READY TO PUT TO USE. I HAVE GONE THROUGH THE TELEPHONE BILLS (BSNL FOR TELEPHONE NO. 2350406 INSTALLED AT THE PREMISES I.E. GAT NO.5, UM ALE PO DHANWAD, UMALE). A PERUSAL OF THE SAME REVEALS THAT THERE WE RE ONLY 3 CALLS FROM 2/04/2005 TO 30/04/2005, 248 CALLS FROM 01/05/2005 TO 30/06/2005 AND NO CALL FROM 01/07/2005 TO 31/12/2005. THE OPENING AND CLOSING READING WAS SAME I.E. 251 ON 01/07/2005 AND 31/12/2005, RESPECT IVELY. ELECTRICITY BILL WILL NOT PROVE THAT THE BUILDING WAS COMPLETE AND F IT TO USE AS ELECTRICITY IS CONSUMED FOR CONSTRUCTION ACTIVITIES. MOREOVER, THE APPELLANT HAS FAILED TO FURNISH 'COMPLETION CERTIFICATE' FROM THE CORPORATI ON/LOCAL BODY CONCERNED. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE I AM OF THE CONSIDERED VIEW THAT THE BUILDING WAS NOT ONLY INCOMPLETE, BUT ALSO UNFIT TO BE USED. INTEREST CLAIMED BY THE APPE LLANT ON LOAN TAKEN FOR CONSTRUCTION, THEREFORE, CANNOT BE ALLOWED AS REVEN UE EXPENDITURE IN THE YEAR UNDER CONSIDERATION. THE ADDITION MADE BY AO I S CONFIRMED. 7. BEFORE US, THERE IS NO MATERIAL LEAD BY THE ASSE SSEE WHICH WOULD REQUIRE US TO DISTRACT FROM THE FINDINGS OF THE CIT (A) WHICH ARE BASED ON AN APPROPRIATE APPRECIATION OF THE EVIDENCE AND MATERI AL PUT BEFORE HIM. HAVING REGARD TO THE MATERIAL AND EVIDENCE ON RECORD, WE F IND THAT THE CIT(A) MADE NO ERROR IN SUSTAINING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS.12,82,410/- OUT OF INTEREST EXPENDITURE ON LO ANS. THUS, ON THIS ASPECT, ASSESSEE FAILS. ITA NO.751/PN/2013 A.Y. : 2006-07 8. THE ONLY OTHER ISSUE RAISED IN THE MEMO OF APPEA L IS WITH REGARD TO THE DEPRECIATION CLAIMED ON TEMPO TRAVELLER @ 30%, WHIC H HAS SINCE BEEN ALLOWED BY THE ASSESSING OFFICER @ 15%. THE SAID G ROUND HAS NOT BEEN PRESSED AT THE TIME OF HEARING AND ACCORDINGLY THE SAME IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 25 TH JULY, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE