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TMI Blog2015 (6) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... g disposed of by way of this consolidated order for the sake of convenience. 2. First, we take up the Revenue's appeal in ITA No.540/Ahd/2012 for AY 2009-10. The Revenue has raised the following grounds of appeal:- i) The ld.CIT(A) has erred in law and on facts in deleting the interest of Rs. 3,49,522/- added under the proviso to Section 36(1)(iii) of the I.T.Act. ii) The ld.CIT(A) has erred in law and on facts in deleting the addition on account of depreciation of Rs. 13,56,853/-. iii) On the facts and circumstances of the case, the Ld.Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. iv) It is, therefore, prayed that the order of the Ld.Commissioner of Income tax (A) may be set-aside and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84,985/- in the shares of Stainless Wire Ltd. (WOS) - foreign concerns) and confirmed the disallowance in respect of the investment of Rs. 30,43,125/-. The ld.CIT(A) followed the judgement of the Hon'ble Supreme Court rendered in the case of Apollo Tyres reported at 255 ITR 273(SC) and the decision of ITAT in ITA No.1777/Ahd/2009 for the AY 2006-07 in the case of ACITGandhinagar vs. Gujarat State Energy Generation Ltd. The ld.CIT(A) observed that disallowance made u/s.14A should not be added while computing book profit. Against the order of the ld.CIT(A), now the Revenue and the Assessee both are in cross-appeals before us. 4. First ground of Revenue's appeal is against deletion of disallowance of interest of Rs. 3,49,522/-. The ld.Sr.DR S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there on record to indicate that any interest was paid to create this capital work-in-progress. This way, the first and second conditions for capitalizing interest are not fulfilled. Accordingly, interest cannot be capitalized as per the provisions of proviso to section 36(1)(iii). Thirdly, provisions of proviso to section 36(1)(iii) does not provide for proportionate capitalization of interest. In view of above, capitalization of interest of Rs. 3,49,522 is deleted. This ground of appeal is allowed. 5.1. From the above finding on fact, it revealed that the AO has not brought anything on record to indicate that capital was borrowed for capital work-in-progress. This finding on fact is not rebutted by the Revenue by placing any material o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cisions for earlier assessments, the A.O. is directed to allow depreciation in consonance with the order giving effect to appellate order in the immediately preceding year i.e. A.Y. 2007-08. This ground of appeal is allowed." 5.3. Since the facts are identical in this year as it was in the A.Y. 2008-09, accordingly respectfully following order of my Ld.predecessor, the A.O. is directed to allow depreciation as per the appellate orders in the immediately preceding years. In view of above, this ground of appeal is allowed." 6.1. The Revenue has not brought any material on record as to how the facts in the present case are different from the facts in the earlier years. The Revenue has not placed any material on record suggesting that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not inclined to agree with it. It is a matter of fact that provisions of rule 8D of the I.T.Rules, 1962 are operational from 28-3-2008 and the same is applicable from A.Y. 2008-09 onwards. These provisions are applicable for the assessment under consideration i.e. A.Y. 2009-10. Since provisions of Rule 8D r.w.s. 14A are mandatory in nature, accordingly, disallowance u/s.14A on an investments of Rs. 30,43,125/- can be considered for disallowance. The A.O. is directed to work out disallowance of interest and administrative expenses as per the provisions of Rule 8D of I.T. Rules, 1962 on an investment of Rs. 30,43,125/- and give the consequential relief to the appellant. This ground of appeal is partly allowed." 8.1. There is no dispute wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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