TMI Blog2019 (4) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the shape of share capital, reserves and surplus, as well as net revenue from operations, we are of the view that alleged investment in WIP could be assumed as carried from these surplus funds. No notional interest ought to be calculated for capiialization. In order to fortify ourselves, we would like to refer to the decision of Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities & Power Ltd.[2009 (1) TMI 4 - BOMBAY HIGH COURT] - Decided in favour of assessee. - ITA No. 1401/Ahd/2017 - - - Dated:- 25-3-2019 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER For The Assessee : Shri S.N. Soparkar, Sr.Advocate For The Revenue : Shri L.P. Jain, Sr.DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the ld.CIT(A) in the Asstt.Year 2013-14. The discussion made by the ld.CIT(A) in this respect reads as under: h) Without prejudice to what is stated above, even if your Honor is of the view that disallowance shall be made in respect of interest expense than it should be made by taking interest rate @9.75% as per the terms of CDR to the company instead of 10.75%. We would further like to state that similar view has been already accepted by the Hon'ble CIT(A)-1 in companies appeal for AY.2013-14. 2.3. I have carefully considered the Assessment Order and the submission of the appellant carefully. The Assessing Officer has made disallowance of interest on capital work in progress of ₹ 18,96,716/-. it is pertinent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan of ₹ 33,73,88,300/- for the purpose of making such payments in respect of such capital work in progress. Since no new fund has been raised by way of term loan by the appellant company, it is quite clear that such amount has been paid out of interest free loan, internal cash accruals and paid up capital of the company. The reliance has been placed on the decision High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities Power Ltd 178 Taxman 135{Bom.) ...xx where in it has been categorically specified that when there are interest free and interest bearing both funds are available then basic presumption is that such interest free advance has been made out of interest free advance available. The appellant has fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side. It would be appropriate and fair to adopt the interest at the rate of 9.75% for the calculation of interest on capital work on progress. This view has also been taken in the earlier years in the appellant case by the CIT(A)1 where he had hold that interest on capital work in progress should be calculated at the rate of 9.75% and not at the rate of 12%. In view of the above discussion and following the decision of my predecessor for earlier assessment years, the assessing officer is directed to calculate the interest on capital work on progress on daily basis at the rate of 9.75% on the amount of ₹ 4,83,38,831 ATMs ground of appeal is partly allowed . In view of above referred order, issue of disallowance of interest on cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the assessee, we find that the disallowance of interest on capital work-inprogress was reversed by the co-ordinate bench in assessee's own case in AY 2012-13. The relevant operative part of the order of the ITAT is reproduced hereunder: 5. With the assistance of the Id.representatives, we have gone through the record carefully. The assessee has annual report containing the balance sheet and placed on record other details. The assessee has reserves and surplus of more than Es.48 crores. It has internal accrual during the year which can lake care of such investments. The Id. counsel for the assessee took us through net cash flow from operations available on page no.20 of the annual report which suggest that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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