TMI Blog2017 (4) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... nish the complete working of the interest which was to be disallowed based on the date on which the funds were used for the purchase of the asset till the date when it was actually put to use. Vide submissions filed on 23.10.2013 the AR of the appellant has filed these details. The details filed show that the entire amount of interest which could be disallowed is ₹ 2,24,334/-.- Decided against revenue Admission of additional evidence in violation of Rule 46A of the I.T.Rules, 1962 - Held that:- Notwithstanding Rule 46A of the IT Rules, the CIT(A) has inherent power under s.250(4) to call for and admit such evidence as necessary for the disposal of the appeal. Therefore, Rule 46A does not act as a fetter for exercising the power available to the CIT(A). Thus ground No.2(b) raised by the Revenue has no force in law and is accordingly dismissed. - I.T.A. No. 84/Ahd/2014 , CO. No. 173/Ahd/2014 - - - Dated:- 31-3-2017 - Shri Pradip Kumar Kedia, Accountant Member And Shri Mahavir Prasad, Judicial Member Appellant by : Shri G.C. Daxini, Sr.DR Respondent by : Shri S.N. Divatia, AR ORDER Per Pradip Kumar Kedia, AM The Revenue has filed the appeal against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Goetze (India) Ltd. vs. CIT (2006) 157 Taxman 1 (SC). 3.1. The Ld.AR submitted that the CIT(A) in first appeal has agreed with the action of the assessee in filing the revised work of book profit after claiming deduction towards unabsorbed brought forward business losses etc. The relevant operative para of the order of the CIT(A) read as under: 5. I have gone through the assessment order and submissions of the A.R. of the appellant carefully. It is seen that the appellant had made a wrong claim in the return of income filed that it was a sick company as per clause (vii) of the explanation to section 115JB(2) of the Act. The AO noticed this error and asked the appellant to explain how it was a sick company as per clause (vii) of the explanation to section 115JB(2) of the Act. At the time of assessment the appellant accepted the fact that it was not a sick company as per clause (vii) of the explanation to section 115JB(2) of the Act and furnished a revised computation of book profit wherein the appellant made adjustment for unabsorbed losses and brought forward unabsorbed depreciation. The AO held that the revised computation amounted to making fresh claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te4rest u/s.36(1)(iii) of the Act. On perusal of fixed assets schedule of annual report of the assessee. It is seen that certain assets are under installation. As pr the provisions of section 36(10(iii) of the Act, any interest paid in respect of capital borrowed for acquisition of an asset for extension of the existing business is not allowable for any period beginning from the date on which the capital was borrowed for acquisition of the assets till the date on which such asset was put to use. Therefore, vide order sheet entry dated 22/12/2012, the assessee was asked to furnish bank statement of the account from which payments were made for addition of assets under installation. The assessee was also asked to show cause as to why should interest expenditure attributable to acquisition of assets under installation not be disallowed as per the provisions of section 36(1)(iii) read with Explanation 8 of sub section (1) of section 43 of the Act. Vide submission dated 12/12/2012, the assessee furnished explanation in this regard. Relevant para is reproduced as under: 5. Capitalization of Interest on Machinery under Installation During the year assessee has made ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1070000 Total 10533152 Monthwise position of Unsecured Loan From Directors Share holders enclosed herewith. See Page No.396 to 397 Assessee has received job security deposit of ₹ 5600000/- in the month of November 2009 and ₹ 6900000/- in the month of December 2009 which were utilized for making payment to creditors which is reflected in copy of Bank Book please note that assessee has not paid any interest on Job Security Deposit amount. Assessee has credited amount of ₹ 10800000/- on restructuring of creditors. Electron Colour Chem Pvt.Ltd. i.e. reducing amount from creditors list increasing Unsecured Loans From Others. Assessee has availed working capital term loan from The Vijay Co.Op.Bank on 26/12/2009 and utilized it for making payment to the creditors which is reflected in Bank Book. The submission of the assessee is duly considered. However, the same is not found; acceptable. The assessee has failed to produce relevant bank statement as requested. As submitted by the assessee itself, the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that if interest is to be calculated it should be calculated on use basis i.e. from date to use to end of year and on amt. of fund used i.e. amt used for making payment for purchase of capital goods. Assessee submits here with date wise calculation sheet of amt. of interest and also interest on unpaid amt. (see page no 1-10 attached here). Total interest comes to ₹ 361722 on addition to plant and machinery out of which interest on unpaid amt.of plant and machinery comes to ₹ 137388 so interest cost of ₹ 224334 (361722- 137388) comes on machinery installation as against ₹ 883758 determined by A.O. 11. I have gone through the assessment order and submission of the A.R. of the appellant carefully. It is seen that the AO has assumed that the appellant has paid an interest @ 8% per annum on all the money borrowed. The AO has also assumed that the entire money for the purchase of the capital goods was spent on 1.4.2009. This is why the AO has disallowed the interest paid on borrowed funds used in the purchase capital goods for the full year @ 8%. The AR of the appellant had no objection to the interest on the funds borrowed and used for purchase of capi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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