TMI Blog2015 (5) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 - - - Dated:- 22-5-2015 - Shri R.K. Panda, Accountant Member and Shri Vikas Awasthy, Judicial Member Appellant by : Shri Rajendra Agiwal Respondent by : Shri B. C. Malakar ORDER PER R.K.PANDA, AM : The assessee has filed two separate Miscellaneous Applications requesting the Tribunal to recall the common order of the Tribunal passed on 30.04.2014 for assessment years 2006-07 and 2007-08 arising out of ITA Nos.1651 1652/PN/2012 and decide the issue afresh in the light of correct factual and legal position. For the sake of convenience, both the Miscellaneous Applications were heard together and are being disposed of by this common order. MA No.75/PN/2014 : 2. The Ld. Counsel for the assessee referring to the Miscellaneous Application submitted that the assessee had taken a ground before the Tribunal regarding allocation of interest while working out eligible profits for deduction under section 80-IB(10) of the Act. He submitted that the Assessing Officer in the order passed under section 143(3) of the Act has apportioned interest expense of ₹ 1,69,25,345/- between eligible 80-IB(10) projects and non-eligible 80-IB(10) projects and red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was brought to the notice of the Tribunal, however, the Tribunal decided the issue against the assessee. He submitted that there seems to be inaccuracy occurred in the order of the Tribunal due to mix-up of the facts. He submitted that it is an accepted fact that the assessee had sufficient owned funds by way of advance from customers in 80-IB(10) projects and as such no funds specifically have been borrowed for the purposes of these eligible projects. Further, the borrowed funds were neither taken for eligible projects nor utilized for the construction of such projects and therefore, the lower authorities have erred in apportioning interest expenses to the projects eligible for deduction under section 80-IB(10) of the Act. He submitted that the assessee has already discharged its onus regarding actual utilization of interest bearing funds for particular projects by submitting the detailed project-wise chart summarizing the fund flow position. In the said charts, the project-wise customer advances have also been mentioned and thereafter the project-wise surplus and deficit was worked out. It was further submitted that the accounts have been audited by the Tax Auditor as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtioned among all the projects i.e. non 80IB(10) as well as 80IB(10) projects. The conclusion of the CIT(A) on this aspect is as under :- The appellant has borrowed on interest substantial funds which are used as working capital for execution of various construction projects. Such interest expenditure is treated as 'period cost' and debited to the common profit loss account and not as direct cost of a particular project. The loans were availed and utilized for all the projects and the funds were mixed up and as admitted by the appellant itself it was not possible to Identify and allocate the Interest cost to a particular project. There was interlacing and inter-mingling of funds even though the projects are geographically located at different sites. As when there is requirement of funds for execution of a particular project whether 80IB(10) project or non 80(IB)(10) project, the funds are drawn from the common pool of funds, which are being used by the appellant for various activities. In such a situation, the claim of the appellant that borrowed funds were not utilized for 80IB (10) projects and therefore, there cannot be any apportionment of interest expenditure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the aforesaid order of the CIT(A) assessee is in appeal before us. At the time of hearing, the learned counsel for the assessee pointed out that the assessee was maintaining project-wise details and account of direct expenses and income so as to arrive at project-wise profit and manner of account maintenance also reflects project-wise details of debtors/creditors advanced from flat-holders, etc.. It was pointed out that in view of the availability of such details accounts for each project, assessee was able to establish that in the case of 80IB(10) projects there was surplus of fund position throughout the year on account of receipt of customers advances and therefore only noninterest bearings funds were utilized towards expenditure on such products. It was also contended that though the assessee is no aggrieved with the basis of apportionment of interest decided by the CIT(A), so however, as per the assessee the specific advances received from customers for the 80IB(10) projects were available for spending in the respective projects and the spending of interest bearing funds for such projects would only be for the shortfall, if any. The learned counsel submitted that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, the learned counsel vehemently pointed out that the necessity of borrowed as being used in a particular project is to be examined as to whether or not a surplus or deficit appeared in a project which could be examined on the basis of the funds-flow submitted. In our considered opinion, the said plea cast and onus entirely on the assessee to demonstrate the actual utilization of interest-bearing funds of a particular project, which the assessee admits that the project-wise borrowed funds and interest cannot be identified from the examination of the bank account. 14. Thus, we find no force in the plea of the assessee and accordingly the order of the CIT(A) is hereby affirmed and the assessee fails. 7. From the above, we find the Tribunal while deciding the issue has clearly mentioned that the onus was entirely on the assessee to demonstrate the actual utilization of interest-bearing funds for a particular project and the assessee admits that the utilization of projectwise borrowed funds and interest cannot be identified from the examination of the common bank account. Under these circumstances, we find the Tribunal upheld the order of the Ld. CIT(A) and therefore, in our ..... X X X X Extracts X X X X X X X X Extracts X X X X
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