TMI Blog2014 (1) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2001-02 - Interest accruing on loans obtained in foreign currency from Asian Development Bank and Japan Bank of International Cooperation is deductible in computing the income even though it has not become payable - Whether liability did not crystallize in the year under consideration or not, the interest is deductible since the assessee is following mercantile system of accounting - Following Bharat Earth Movers Vs. CIT [2000 (8) TMI 4 - SUPREME Court] - Deduction of interest accrued on such foreign loans is allowable – decided in favour of assessee. Financial charges written off – Held that:- Following assessee’s own case for earlier years - Assessing Officer had not examined the issue in the light of material filed before him - He has simply disallowed the claim of the assessee on the grounds that the relevant details were not filed by the assessee - The matter was restored to the file of the AO for fresh adjudication. Depreciation on assets added to the block after 30.09.2001 – Held that:- Following assessee’s own case for earlier year - Hundred per cent depreciation is deductible on books owned by lending libraries and professionals, the rate of 60% is applicable in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. Further, the administrative charges and contingencies, as incurred by HUDCO in this process should form basis of the actual expenses incurred which can be adjusted out of the surpluses available with the Organisation. It was decided that HUDCO will be allowed an interest component of 17% per annum and an Admn. and overhead charges of 1-1/2% ...... The component of 1-1/2% representing Admn. and other overhead charges may be calculated on the computed cost of the project.........." 3.2 The Andrews Ganj Project, as discussed earlier, consisted not only of the community center but also of the residential flats for Central Government. In my opinion, the assessee has incorrectly reversed the administrative and overhead charges on the residential units construction and the same is disallowed. The addition is Rs.35,57,615/- ." 4. On appeal, learned CIT(A) also sustained the order of the Assessing Officer in this regard. 5. At the time of hearing before us, the learned counsel for the assessee reiterated the same argument as was raised before the Assessing Officer that the overhead charges were not leviable on general pool accommodation. However, we find that the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee has also not given complete details of the prior period expenses and has not explained how such expenses have crystallized during the accounting year relevant to the assessment year under consideration. In view of the above we set aside the orders of lower authorities on this point and restore the matter to the file of the Assessing Officer. We direct the assessee to furnish complete details of prior period expenses of Rs. 1,45,00,000/- and also explain how the same have crystallized during the accounting year relevant to assessment year under appeal. Thereafter, the Assessing Officer will examine the issue afresh in accordance with law and will pass a speaking order thereon. 11. Ground No.3 of the assessee's appeal reads as under:- "The learned Assessing Officer has erred in fact in disallowing a sum of Rs.15,53,43,413/- being interest accrued but not due on foreign loans." 12. We have heard both the sides and perused the material placed before us. We find this issue to be covered in favour of the assessee by the decision of ITAT in assessee's own case for AY 2000-01 2001-02, wherein, vide order dated 7th April, 2009 in ITA Nos.2826 2827/Del/2004, the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 37. If the facts of the case are examined in the light of decision of Hon'ble Supreme Court, we find that interest has accrued at definite rate fixed by the parties. The assessee is following mercantile system of accounting. Therefore, the interest liability has crystallized during the year under consideration and is allowable as deduction u/s 37(1) of the Act. We accordingly set aside the order of the ld.CIT(Appeals) and direct the AO to allow the claim of the assessee." Respectfully following the aforesaid order, these grounds are allowed for both the years." 13. Respectfully following the above order of the Tribunal in assessee's own case, we direct the Assessing Officer to allow deduction of interest accrued on such foreign loans. 14. Ground No.4 of the assessee's appeal reads as under:- "The learned Assessing Officer has erred in fact in disallowing a sum of Rs.17,79,63,672/- being financial charges written off." 15. We find that this issue is also covered in favour of the assessee by the order of the Tribunal dated 7th April, 2009 (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as allowed." 16. Respectfully following the above order of the Tribunal, we set aside this issue to the file of the Assessing Officer with the direction to decide the same afresh keeping in view the directions of the Tribunal given above. Needless to say that he will allow adequate opportunity of being heard to the assessee. 17. Ground No.5 of the assessee's appeal reads as under:- "The learned Assessing Officer has erred in fact in disallowing a sum of Rs.1,32,822/- being depreciation in respect of assets added to the block after 30.09.2001." 18. We find this issue also to be covered in favour of the assessee by the order of the Tribunal dated 7th April, 2009 (supra) in assessee's own case, wherein the ITAT held as under:- "7. Ground no.4 for assessment year 2000-01 and ground no.5 for assessment year 2001-02 are similar in nature to the effect that the learned CIT(Appeals) erred in not allowing depreciation on books @ 100%, being Rs.1,25,458/- for assessment year 2000-01 and Rs.70,049/- for assessment year 2001-02. After hearing both the parties, it was noted that while hundred per cent depreciation is deductible on books owned by lending libraries and professio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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