Tribunal grants appeal on interest & depreciation, remands section 36(1)(vii) issue for verification.

The Tribunal allowed the appeals of the assessee regarding the disallowance of interest expenditure and depreciation. It remanded the issue of disallowance of expenditure under section 36(1)(vii) to the AO for verification, emphasizing the need for consistency. The Tribunal's directions were to be applied consistently to the assessment years 2012-13 to 2014-15.

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Issues Involved:
1. Disallowance of interest expenditure claimed by the assessee.
2. Disallowance of depreciation claimed by the assessee.
3. Disallowance of expenditure claimed under section 36(1)(vii) as exceptional items.
4. Non-allowance of set off of brought forward unabsorbed business loss and unabsorbed depreciation.

Detailed Analysis:

1. Disallowance of Interest Expenditure:
The assessee challenged the disallowance of Rs. 4,77,36,535/- on account of interest expenditure. The Tribunal noted that similar disallowances in the assessee’s own case for previous years (AY 2004-05 to 2011-12) were deleted by the Tribunal. The Tribunal observed that the interest paid on fresh loans taken to repay old loans should be allowed as business expenditure. The Tribunal followed the principle of consistency and directed the AO to delete the disallowance, emphasizing that the character of the loan remains the same, and the fresh loans were utilized for repaying old loans taken for business purposes.

2. Disallowance of Depreciation:
The assessee contested the disallowance of Rs. 25,282/- on account of depreciation. The Tribunal found that the AO did not provide any cogent reason for the disallowance, and the CIT(A) upheld the disallowance without proper reasoning. The Tribunal noted that the assets were used for business purposes and formed part of the opening block of assets. Therefore, the Tribunal set aside the disallowance and allowed the depreciation claimed by the assessee.

3. Disallowance of Expenditure under Section 36(1)(vii):
The assessee claimed Rs. 11,59,34,654/- as exceptional items, which included interest recoverable from debtors, complex maintenance charges, and electric installation charges. The AO disallowed the claim, stating that the assessee failed to provide complete details and documentary proof. The Tribunal noted that the assessee had written off these amounts in the books of accounts and had offered them for taxation in earlier years. Referring to the Supreme Court judgment in TRF Ltd. and CBDT Circular No. 12/2016, the Tribunal held that the assessee only needed to write off the debt in the books of accounts to claim the deduction. The Tribunal remanded the matter to the AO for verifying the details and directed that if the conditions were met, the deduction should be allowed.

4. Non-allowance of Set Off of Brought Forward Losses:
The assessee argued that the CIT(A) erred in not allowing the set off of brought forward unabsorbed business loss and unabsorbed depreciation. The Tribunal did not provide a specific ruling on this issue in the summarized judgment, but it can be inferred that the Tribunal’s directions in the other issues would impact the computation of income and the set-off of losses.

Conclusion:
The Tribunal allowed the appeals of the assessee on the grounds of disallowance of interest expenditure and depreciation. It remanded the issue of disallowance of expenditure under section 36(1)(vii) to the AO for verification. The Tribunal's directions were to be applied consistently to the assessment years 2012-13 to 2014-15.

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