TMI Blog2021 (12) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) were already furnished before the Assessing Officer in their letter dated 23.12.2013 and after examining the materials available on record, the ld. CIT(A) has held that the interest expenditure had been capitalized and not claimed as revenue expenditure, which was not disputed by the Assessing Officer in his remand report against the submissions of the assessee. In view of the above, we find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the Revenue stands dismissed. - ITA No. 378/Chny/2020 - - - Dated:- 8-12-2021 - Duvvuru R.L. Reddy, Member (J) And G. Manjunatha, Member (A) For the Appellant : S. Palanikumar, CIT For the Respondents : D. Anand, Advocate ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Chennai, dated 12.12.2019 for the assessment year 2008-09. The Revenue has raised the following grounds: 1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case. 2. Whether on the facts and circumstances of the case, is it correct on the part of learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital loss in respect of commercial property a sum of ₹ 41,24,11,072/- has not been included in the cost of acquisition being interest paid on loans and thus, the assessee was asked to clarify this. The assessee vide its letter dated 18.11.2013 submitted that the assessee never claimed that the sum of ₹ 41,24,11,072/- represents an expenditure incurred wholly and exclusively in connection with the transfer. On the other hand, this amount was claimed as part of the cost of acquisition. This amount, being the interest incurred on the loan from ICICI and utilized for the commercial project, has been considered for the calculation of the cost of acquisition. This amount does not represent any interest paid by the assessee to M/s. ARCIL. This amount is the interest on the loan from ICICI cumulative from the financial year 1996-97 and did not arise during the financial year 2008-09 when ICICI transferred their loan to ARCIL. The assessee has further submitted before the Assessing Officer that the sum of ₹ 41,24,11,072/- has correctly been considered as part of cost of acquisition while assessing the income under section 143(3) of the Act. However, in order to verify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,11,072/- had been correctly allowed as part of cost of acquisition in the original order of assessment. During the course of appellate proceedings, the facts furnished by the assessee are reproduced as under: B) The interest pertaining to the loans taken for Hotel project (comprising of Hotel property and Commercial property) has been kept as part of capital Work in progress and shown in the Balance Sheet. The Table given below giving details of the interest pertaining to the hotel project capitalized on year to year basis proves that interest on the loans relating to hotel project was capitalized and that such interest was not charged to profit and loss account. Copies of the ledger extracts of the interest account and Balance Sheets of all the above years are enclosed in evidence of the submission. Table 1 Financial Year Interest for the year provided on the loans to Hotel project (in Rs.) Accumulated Closing Balance (in Rs.) 1997-98 31,02,98,033/- 31,02,98,033/- 1998-99 73,14,55,992/- 104,17,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 76,83,17,763/- was waived by Financial Institutions and the accumulated balance of ₹ 128,44,95,217/- was transferred to Capital WIP and sold. It was further submission that the above details had been submitted before the Assessing Officer vide letter dated 23.12.2013. After considering the submissions of the AR of the assessee and examining the Profit and Loss Account of the company for the year ended 31.03.2008, the ld. CIT(A) noticed that during the said Financial Year, only finance charges amounting to ₹ 10,51,899/- were claimed by the assessee. The A.R. explained that these expenses formed part of the fixed assets under commercial project assets in Schedule - E of the Balance Sheet. They were treated as part of the commercial expenditure allocation in the Fixed Asset Schedule. Taking into account the facts and circumstances of this case, the ld. CIT(A) has held that the interest expenditure had been capitalized and not claimed as revenue expenditure and therefore, the disallowance of ₹ 41,24,11,072/- made by the Assessing Officer was deleted. 4. Aggrieved, the Revenue is in appeal before the Tribunal. By referring to the grounds of appeal, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year. Further, by referring to the assessment order passed under section 143(3) r.w.s. 147 of the Act, the ld. Counsel for the assessee has submitted that para 3 and 4 clearly speaks the reply submitted before the Assessing Officer that the interest paid on loans of ₹ 41,24,11,072/- has been included in the cost of acquisition and not claimed as revenue expenditure. It was further submitted that the interest expenditure which had accumulated over a period of years was in the nature of pre-operative expenses and was capitalized. It was further submission that the above details have been submitted before the Assessing Officer vide letter dated 23.12.2013. After considering the submissions of the AR of the assessee and examining the Profit and Loss Account of the company for the year ended 31.03.2008, the ld. CIT(A) noticed that during the said Financial Year, only finance charges amounting to ₹ 10,51,899/- were claimed by the assessee. It was further submission of the ld. Counsel for the assessee that these expenses formed part of the fixed assets under commercial project assets in Schedule - E of the Balance Sheet. It was further submission that the assessee trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other hand, the ld. Counsel for the assessee has submitted that the assessee has never filed any additional evidence before the ld. CIT(A). The ld. CIT(A) has relied on the balance, profit and loss account of assessee company and passed the appellate order. It was further submitted that the balance sheet and profit and loss accounts are part and parcel of the return of income of the assessee. Therefore, the contention of the ld. DR that the ld. CIT(A) has not given proper opportunity to the Assessing Officer is not factually correct. Apart from this, the ld. CIT(A) also called remand report from the Assessing Officer before adjudicating the appellate order. Therefore, the ld. Counsel for the assessee prayed for confirming the appellate order. 6.2. We have heard rival contentions and gone through the orders of authorities below. In the assessment order, the Assessing Officer disallowed the revenue expenditure amounting to ₹ 35,00,40,000/-. In para 6 of the reassessment order, the Assessing Officer stated that ₹ 21.14 crores (₹ 108.35 crores - 87.21 crores) and ₹ 7.13 crores (₹ 48.37 crores - ₹ 41.24 crores) had been claimed as expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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