TMI Blog2015 (8) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... ound placed in the profit and loss account but the assessee pressed his claim by way of letter filed before the Assessing Officer during the assessment proceedings. In view of the decision of the hon'ble apex court in the case of Goetze (India) Ltd. v. CIT [2006 (3) TMI 75 - SUPREME Court ] AO is not empowered to entertain any claim out of return of income which could not find place in the original return of income or otherwise than by revised return but in the same decision, the hon'ble apex court made it clear that this did not impinge on the power of the Tribunal. However, we are of the considered opinion that since the asset, i.e., factory premises was already in use of the assessee, therefore, the interest paid along with instalmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Defence, Government of India, British Aerospace, U.K. and for GE med. The assessee filed a return of income on September 27, 2008, declaring an income of ₹ 3,97,79,640 and the same was processed under section 143(1) of the Income-tax Act, 1961. Subsequently, the case was selected for scrutiny through CASS and statutory notices under sections 143(2) and 142(1) of the Act, along with detailed questionnaire, were served on the assessee. The Assessing Officer noticed that the assessee paid ₹ 2,66,97,900 towards permission from the Government under a new policy allowed the land to be used for any other purpose besides running a factory including the commercial/service activities on payment of certain amount. The said amount of insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income-tax (Appeals) erred in allowing the deduction of interest as revenue expenditure even though the same was never claimed by the assessee, either in the return of income or by way of revised return of income. The learned Departmental representative further contended that the assessee could have claimed it by way of a revised return during the course of assessment proceedings only and the Commissioner of Income-tax (Appeals) was not empowered to allow the same during the first appellate proceedings. The learned Departmental representative vehemently contended that the Commissioner of Income-tax (Appeals) was not justified in allowing the interest as revenue expenditure even though the same has been incurred in respect of capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative and the facts of the case on record. The main issue is as to whether the interest of ₹ 1,36,17,335 is revenue or capital in nature ? As explained above it is admitted that the interest was paid in respect of the conversion charges payable for the land, where the only factory of the appellant from which the business is carried on and continues to be carried on till date, is situated. The amount of conversion charges have already been capitalised and the issue at hand is only as regards the allowability of the interest paid on the instalments of the principle amount. The appellant submitted that the appellant's factory is situated on the Industrial site No. 143B in Industrial Area Phase I Chandigarh. The Chandigarh U.T. Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets, is allowed as revenue expenditure, I see no reason as to why the same should be treated of capital in nature on the case under consideration. It is trite that notwithstanding treatment of a particular item in the books of account, whether the expense is revenue or not has to be decided on the nature of the expense. Therefore, even though said interest amount was capitalised in the books of account erroneously, which was later rectified in the books of account during financial year 2009-10, the nature of the expense is revenue and the same is a deductible expenditure. The Assessing Officer is, therefore, directed to allow the claim of ₹ 1,36,17,335 on account of interest made by the appellant. Ground No. 2 is accordingly allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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