B.B. Verma Vs JCIT (ITAT Raipur)
Facts-
The assessee firm which is engaged in the business of a contractor had filed its original ROI for the AY 2011-12 on 30.09.2011, declaring an income of Rs.85,46,970/-. The ROI filed by the assessee was processed as such u/s.143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act.
Assessment was, thereafter, framed by the AO u/s.143(3) of the Act dated 10.03.2014 determining the income of the assessee at Rs.1,69,65,645/- after, inter alia, making various additions/disallowances.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success in so far the aforesaid additions/ disallowances and other issues in question were concerned. The assessee being aggrieved with the order of the CIT(Appeals) has preferred the present appeal.
Conclusion-In our considered view, the interest expenditure to the extent incurred by the assessee qua the borrowed funds which were utilized by it for acquiring machinery in the course of its existing line of business was allowable as a deduction u/s.37(1) of the Act. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of DCIT Vs. Core Healthcare Ltd. (2009) 308 ITR 263 (Guj.). On the basis of our aforesaid observations, we are of the considered view that the assessee would be entitled for deduction of interest paid/payable on the interest-bearing funds borrowed from financial institutions, i.e, to the extent such interest expenditure had crystallized during the year under consideration.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the assessee is directed against the order passed by the CIT (Appeal), Bilaspur, dated 29.03.2016, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 10.03.2014 for assessment year 2011-12. Before us the assessee has assailed the impugned order on the following grounds of appeal:
“1.That the learned CIT(A) erred in not allowing credit of TDS of Rs.88,445/- being received under PMGSY on account of advance for mobilization made by the learned AO.
Prayed that the credit of TDS of Rs.88,445/- either be allowed this year or it be allowed in A.Y.2012-13 & 2013-14 when the amount of advance mobilization was recognized as revenue in accounts.
2. That the learned CIT(A) further erred in confirming the addition of Rs.5,96,400/- being amount received from M/s. Aditya Minerals, Korba added by learned AO though the appellant discharged the burden of proving identification, credit-worthiness and genuineness of transaction.
Prayed to delete the addition.
3. That the learned CIT(A) further erred in confirming the disallowance of Rs.1,14,520/- made by the learned AO comprising of Rs.84,520/- being depreciation disallowed @20% on vehicle and Rs.30,000/- being lumpsum disallowance on account of vehicle expenses rejecting the explanation.
Prayed that considering the volume of business and scattered sites, the disallowance is unjustified and be deleted.
4. That the learned CIT(A) further erred in dismissing the ground that when depreciation on interest capitalized to vehicle account and not claimed to profit & loss A/c. was disallowed then interest at Rs.8,62,195/- be allowed.
Prayed to allow the interest of Rs.8,62,195/-.”
2. Succinctly stated, the assessee firm which is engaged in the business of a contractor had filed its original return of income for the assessment year 2011-12 on 30.09.2011, declaring an income of Rs.85,46,970/-. The return of income filed by the assessee was processed as such u/s.143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act.
3. Assessment was, thereafter, framed by the Assessing Officer u/s.143(3) of the Act dated 10.03.2014 determining the income of the assessee at Rs.1,69,65,645/- after, inter alia, making the following additions/disallowances:
