TMI Blog2017 (2) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the assessee submitted the details of assets along with tax audit report, the annexure of the addition to the fixed assets. The purchase has also been submitted and the record in connection with put to use in the said assessment order has also been furnished. In fact the assessee made an addition to the existing fixed asset in the building to the tune of ₹ 2,19,990/-, plant and machinery of ₹ 27,16,063/- and electrification of ₹ 65,448/- and accordingly the depreciation was claimed. The Assessing Officer declined the claim of the assessee on the basis of the finding in case M/s. Metcraft Engineering Corporation. No independent views were given for declining the claim of the assessee. In view of the said circumstances when the assessee has demonstrated his case justifiably by proceeding the record as well as working, therefore, in view of the said circumstances, we are of the view that the CIT(A) passed the order on this issue judiciously and correctly which is not require to be interfere with at this appellate stage. Disallowance u/s 36(1)(iii) and disallowance of the interest expenditure incurred towards the acquisition of fixed assets - Held that:- C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the addition of ₹ 9,11,707/- made by A.O. without appreciating the fact that the assessee failed to prove that the assets were usable during the assessment procedure and did not produce any detail in this regard. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the addition of ₹ 3,52,576/- made by A.O. without appreciating the fact that the assessee had failed to provide supporting evidences to prove that Pvt. Ltd. company on which investment of ₹ 13,50,000/- was made was a subsidiary of the assessee corporation during the assessment proceedings. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the addition of ₹ 7,86,895/- made by A.O. without providing any reasonable basis and without appreciating the provisions of the proviso to section 36(1)(iii) of the Act. 5. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the A.O. be restored. 3. The brief facts of the case are that the assessee filed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantity was generated as scrap which was sold at ₹ 25,97,221/- and duly reflected in the sales. Therefore the question of any addition did not arise while the assessing officer has assumed that there is no sale of scrap shown by the assessee and therefore he has worked out the value of scrap on the basis of market value of finished goods and made addition of ₹ 70,32,414/-. On going through the submission and record, it is seen that similar type of scrap were generated in earlier years and the sale value have been accepted by the department. The assessing officer has not given any reason for taking the value of scrap sales at the price of finished goods sale, since the appellant agreed that there is no dispute over quantity of scrap sold which is already appearing in the sales. Therefore, it is argued that there is no reason to make any addition in respect of sale of scrap which is already accounted. The appellant has also submitted that the scrap generated is usual as per norms prescribed by the Director General of Foreign Trade. Standard Input Output Norms for SI. No.C692 is notified by DGFT in the handbook (Vol.2) 2002-07. The relevant portion of item no.C692 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depreciation was claimed. The Assessing Officer declined the claim of the assessee on the basis of the finding in case M/s. Metcraft Engineering Corporation. No independent views were given for declining the claim of the assessee. In view of the said circumstances when the assessee has demonstrated his case justifiably by proceeding the record as well as working, therefore, in view of the said circumstances, we are of the view that the CIT(A) passed the order on this issue judiciously and correctly which is not require to be interfere with at this appellate stage. ISSUE NO.3 4:- 7. Issue no.3 4 are interconnected, therefore, are being taken up together for adjudication. Under these issues the revenue has challenged the deletion of disallowance on the basis of section 36(1)(iii) of the Act to the tune of ₹ 3,52,576/- and also and also challenged the deletion of the disallowance of the interest expenditure incurred towards the acquisition of fixed assets to the tune of ₹ 7,86,895/-. Before proceeding further the finding of the CIT(A) on the above said issues is hereby reproduced below: 8.3 I have considered the observations of the Assessing Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partners. The Assessee s Representative has also relied on the decision of 115 ITR Pg. 195, 34 ITR Pg 265, 120 ITR Pg.240, 208 ITR Pg 616 and 332 ITR Pg. 627 stating that even if borrowed funds are used to acquire assets not used during the year still interest paid on borrowed funds were allowable. In some of the above decisions, it was also held that borrowed funds used for capital expenditure were also allowable. It was also explained by the Authorized representative that it is an undisputable fact that the assets acquired are for business purpose and for earning the income. Therefore no part of interest is disallowable. On going through the facts of the case, more particularly relying on the above decisions, I am of the opinion that the assessing officer has erred in disallowing proportionate interest of ₹ 64,77,802/- In the result, this ground is allowed. 8. On appraisal of the above mentioned order the CIT(A) has deleted the disallowance of interest of ₹ 7,21,831/- on investment of ₹ 42,00,000/- in a share of private limited company. In fact the assessee purchased the equity share of ₹ 13,50,000/- of M/s.Metacraft Engineering Pvt. Ltd. whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - made by A.O. without appreciating the fact that the assessee had failed to provide supporting evidences to prove that Pvt. Ltd. company on which investment of ₹ 42,00,000/- was made was a subsidiary of the assessee corporation during the assessment proceedings. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the addition of ₹ 64,77,802/- made by A.O. without providing any reasonable basis and without appreciating the provisions of the proviso to section 36(1)(iii) of the Act. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in deleting the addition of ₹ 2,15,372/- made by A.O. without appreciating the fact that the assessee did not produce any supporting evidence to substantiate his claim during the assessment proceedings. 6. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the A.O. be restored. 12. The matter of controversy involved in ITA No.6233/Mum/2012 is also the same which has been involved in the above mentioned appeal. Since this matter of controversy has already been adjudicated in ITA No. 623 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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