TMI Blog2014 (1) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... - The assessee also earned cash accrual exceeding Rs.4 crores each in the preceding year and in the year under consideration as is apparent from the annual accounts placed in the file - Besides the term loan the assessee was sanctioned working capital limit from Bank of Baroda vide letter dated 30.6.2005 and balance outstanding as on 31.3.2005 on account of working capital, the interest on which cannot be said to have been incurred for making investment in capital assets –there was no infirmity of CIT(A) – Decided against Revenue. - I.T.A. No.2048/Del/2013 - - - Dated:- 25-10-2013 - Shri Rajpal Yadav And Shri T. S. Kapoor,JJ. For the Appellant : Shri R. S. Gill, CIT-DR. For the Respondent : Shri Tarun Kharbanda, C.A. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no interest bearing funds were utilized for capital work in progress and rather surplus profits of preceding year and current year were deployed for the creation of fixed assets. However, the Assessing Officer did not agree with the contentions of assessee and held that assessee had been making continuous investment in the fixed assets for which funds had been used over the year including the year under consideration. Therefore, he calculated an amount of Rs.20.82 lakhs as interest on loans which was used to fund capital asset and for which interest needed to be capitalized. However, he allowed depreciation amounting to Rs.9.58 lakhs out of this capitalized portion and made a net addition of Rs.11.22 lakhs. 3. The assessee filed appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the loans on which interest was paid. However, Assessing Officer has not analyzed the various loans which were taken by the appellant on different occasions and the nature of these loans. Further it has also not been mentioned to what were the fixed assets procured out the interest bearing funds during the year. The AR has noted that the investments during the year were made out of its own surplus profit of the preceding year. This aspect has also not been mentioned in the assessment order as to why the same was not been accepted. ii) After considering the submissions of the AR of the appellant, It is observed that the appellant has taken various loans and deposits and also had surplus cash available to fund its plant machinery dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. 7. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that assessee was sanctioned a term loan of Rs.600 lakhs by IDBI Bank vide sanction letter dated 30.6.2002 placed at page 2 of paper book. The last installment of this term loan was availed by the assessee on 5.3.2003. The assessee had already capitalized an amount of Rs.28.31 lakhs out of interest during the period ending 31.3.2003 as is apparent from paper book page 5. After this term loan the assessee did not take any term loan rather it repaid a part of this term loan and the balance outstanding as on 31.3.2005 is Rs.460 lakhs as is apparent from annual balance sheet placed in the file. The other loans taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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