Deputy Commissioner of Income Tax Circle-4(1)(1), Bangalore V. M/s Karnataka Road Development Corporation Limited , Bangalore

ITA 805/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4642 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 07-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH J
• Keywords: Capital asset; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, B ENGALURU BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER SL. NO. ITA NO.& ASST. YEAR APPELLANT RESPONDENT 1 703/BANG/2017 (2008 - 09) KARNATAKA ROAD D EVELOPMENT CORPORATION,1 ST FLOOR, 16/J, MILLER TANK BED AREA, THIMMAIAH ROAD, CROSS, BENGALURU - 560052. PAN:AABCK2261R ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 11(5), BENGALURU. 2 322/BANG/2017 (2009 - 10) - DO - - DO - 3 704/BANG/2017 (2010 - 11) - DO - - DO - 4 705/BANG/2017 (2011 - 12) - DO - - DO - 5 706/BANG/2017 (2012 - 13) - DO - - DO - 6 805/BANG/2017 (2008 - 09) DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 4(1)(1), BENGALURU . KARNATAKA ROAD DEVELOPMENT CORPORATION, BENGALURU. 7 426/BANG/2017 (2009 - 10) ASST. COM MISSIONER OF INCOME - TAX, CIRCLE 4(1)(1) BENGALURU. - DO - 8 806/BANG/2017 (2010 - 11) DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 4(1)(1),BENGALURU. - DO - 9 807/BANG/2017 (2011 - 12) - DO - - DO - 10 808/BANG/2017 (2012 - 1 3 ) - DO - - DO - AND SL. NO. C.O. NO. CROSS - OB JECTOR RESPONDENT 1 44/BANG/2018 (IN ITA 805/BANG/2017) (2008 - 09) KARNATAKA ROAD DEVELOPMENT CORPORATION, BENGALURU. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 4(1)(1),B LORE. 2 48/BANG/2018 (IN ITA 426/BANG/2017) (2009 - 10) - DO - ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 4(1)(1),B LORE. 3 45/BANG/2018 (IN ITA 806/BANG/2017) (2010 - 11) - DO - - DO - 4 46/BANG/2018 (IN ITA 807/BANG/2017) (2011 - 12 ) - DO - - DO - 5 47/BANG/2018 (IN ITA 808/BANG/2017 (201 2 - 13) - DO - - DO - ITA NO S . 703.....808 /BANG/20 17 PAGE 2 OF 3 ASSESSEE BY : NONE. RE VENUE BY : SHRI B.R.RAMESH, JCIT(DR) DATE OF HEARING : 04/06/2018 DATE OF PRONOUNCEMENT : 08 /06/2018 O R D E R PER BENCH: THESE ARE CROSS APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE DIRECTED AGAINST THE RES PECTIVE ORDERS OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) - 12, BENGALURU, FOR ASSESSMENT YEARS 2008 - 09 TO 2012 - 13. THE ASSESSEE ALSO FILED CROSS OBJECTIONS FOR ASSESSMENT YEARS 2008 - 09 TO 2011 - 12. 2. AT THE TIME OF HEARING OF THE APPEAL S AND CROSS OBJECTIONS NOBODY APPEARED FOR ASSESSEE AND THERE WAS NO REQUEST FOR ADJOURNMENT ALSO . SHRI B.R.RAMESH, LEARNED DEPARTMENTAL REPRESENTATIVE WAS PRESENT. 3. WE CONSIDERED THE MATTER AND ARE OF THE OPINION THAT THE ASSESSEE IS NOT INTERESTED IN PROSE CUTING ITS CASE S . FOLLOWING THE DECISION OF THE HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OF ESTATE OF LATE TUKOJI RAO HOLKAR V. CWT (1997) 223 ITR 480 AND ALSO DECISION OF THE DELHI BENCH OF THE ITAT IN CIT V. MULTIPLAN INDIA P.LTD., (1991) 38 ITD 32 0 , WE DISMISS THE APPEALS AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE AS INFRUCTUOUS FOR NON - PROSECUTION. 4. THE REVENUE RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL IN ITS APPEALS FOR ASSESSMENT YEARS 2008 - 09 TO 2012 - 13: 1. THE ORDER OF THE LD. CIT (A) , IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IS OPPOSED TO LAW AND THE FACT AND CIRCUMSTANCES OF THE CASE. 2. ON FACTS OF THE CASE, THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAS REDUCED THE CAPITAL EXPENDITURE INCURRED IN THE FORM OF INTEREST ON LOAN WITH THE INTEREST INCOME OFFERED UNDER THE HEAD INCOME FROM OTHER SOURCE. 3. ON THE FACTS OF THE CASE, THE LD CL'L(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS TAKEN LOAN FOR THE PURPOSE OF CONSTRUCTION OF BRIDGES WHICH AR E UNDER CONSTRUCTION AND ANY EXPENDITURE IN ITA NO S . 703.....808 /BANG/20 17 PAGE 3 OF 3 THE FORM OF INTEREST ON LOAN FOR THIS PURPOSE HAS TO BE CAPITALIZED AND NOT ELIGIBLE FOR SET OFF AGAINST THE INTEREST INCOME. 4. FOR THESE AND OTHER GROUNDS THAT MAY HE URGED AT THE TIME OF HEARING, IT IS PRAYED TH AT THE ORDER OF THE CIT (A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY HE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. TH E ONLY I SSUE RAISED IN THE APPEALS FILED BY THE REVENUE IS WITH REGARD TO ALLOWANCE OF INTEREST ON LOAN UTILIZED FOR THE PURPOSE OF ACQUIRING CAPITAL ASSETS. IN VIEW OF THE PROVISO TO SECTION 36(1)(III) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] , INTEREST ON LOANS UTILIZED FOR THE PURPOSE OF CAPITAL ASSETS CANNOT BE ALLOWED AS DEDUCTION UNLESS AND UNTIL ASSETS ARE PUT TO USE. UNDISPUTEDLY IN THE PRESENT CASE, THE ASSETS WERE STILL IN WORK - IN - PROGRESS WHICH GOES TO SHOW THAT THE A SSETS ARE NOT PUT TO USE. THEREFORE, WE ALLOW THE GROUNDS OF APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2018 SD/ - SD/ - (SUNIL KUMAR YADAV) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 08/06/2018 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TR IBUNAL BANGALORE