AI Drafter 
TaxTMI 
TaxTMI 
2017 (7) TMI 206
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..... CIT(A), who vide order dt.31.12.2014 in (appeal No.PN/CIT(A)-1/Addl.CIT Rg-1/Pn/71/2013-14) granted partial relief to the assessee. Aggrieved by the order of Ld. CIT(A), Assessee and Revenue are both in appeal before us. 3. The grounds raised by the assessee in appeal No.1208/PUN/2015 reads as under : "1. The Learned Commissioner of Income Tax Appeal (1), Pune has erred in confirming the disallowance of Rs. 1,50,000/- made by the Assessing Officer towards professional fees. 2. The Learned Commissioner of Income Tax Appeal (1), Pune has further erred in confirming the disallowance partly amounting to Rs. 9,19,855/- towards interest paid on capital borrowed for capital work in progress as term loan being expenditure of capital nature. 3. The Learned Commissioner of Income Tax Appeal (1), Pune has also erred in confirming the disallowance amounting to Rs. 1,88,561/- towards proportionate interest on funds used for repayment of loan borrowed for work in progress as term loan being expenditure of capital nature. 4. The Learned Commissioner of Income Tax Appeal (1), Pune has also erred in confirming the disallowance of Rs. 9,41,363/- made by the A....
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....instructions will apply retrospectively to the pending appeals also. In the present case, since it is an undisputed fact that on the additions which are in dispute, the tax effect is less than Rs. 10 lakhs and in the absence of any material placed on record by the Revenue to demonstrate that the issue in the present appeal is covered by exemptions specified in clause (8) of the aforesaid CBDT Circular, we are of the view that the monetary limit prescribed by the instructions of the aforesaid CBDT Circular would be applicable to the present appeal of the Department and therefore the present appeal is not maintainable on account of low tax effect. In such circumstances, we dismiss the appeal of Revenue without expressing any opinion on merits of the case. However, in case there is any error in the computation of the tax effect involved or if for any reason, the aforesaid CBDT Circular is not applicable, it would be open to the Revenue to seek revival of the appeal. 8. In the result, the appeal of the Revenue is dismissed. 9. Now we take-up assessee's appeal in ITA No.1208/PUN/2015. 10. Before us, Ld.A.R. submitted that he does not wish to press ground No.1. In view of the su....
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....466 State Bank of India. 31.05.2009 Term Loan 01502-01WIP 10318686868 90,084 State Bank of India. 30.06.2009 Term Loan 01502-01WIP 1031868868 84,910 State Bank of India. 30.06.2009 Term Loan 15020-00 10318686857 80,552 State Bank of India. 31.07.2009 Term Loan 15020-00 10318686857 70,136 State Bank of India. 31.07.2009 Term Loan 01502-01WIP 1031868868 85,073 State Bank of India. 31.08.2009 Term Loan 15020-00 10318686857 58,810 State Bank of India. 31.08.2009 Term Loan 01502-01WIP 1031868868 82,948 State Bank of India. 30.09.2009 Term Loan 15020-00 10318686857 43,397 State Bank of India. 30.09.2009 Term Loan 01502-01WIP1031868868 77,516 State Bank of India. 31.10.2009 Term Loan 15020-00 10318686857 35,567 State Bank of India. 31.10.2009 Term Loan 01502-01 WIP 1031868868 78,488 State Bank of India. 30.11.2009 Term Loan 01502-01 WIP1031868868 72,894 State Bank of India. 30.11.2009 Term Loan 15020-00 10318686857 19,720 State Bank of India. 18.12,2009 Term Loan 15020-00 10318686857 3,919 State Bank of India. 31.12.2....
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....he business purpose the interest thereon is business expenditure and the same is also debited to profit and Loss account since the first year of repayment. In support of its claim, the copy of the sanction letter giving the details of the loan is enclosed as part of paper book. From the sanction letter it is crystal clear that the loan is availed for expansion of marketing and distribution network including takeover of the term loan from Bank of Maharastra and not for work in progress and hence the Assessing Officer's contention that the amount pertains to interest on capital borrowed for work in progress will not hold good. The said loan was repaid during the month of December 2009." 11.2.1 It is pleaded that considering the fact that the interest was paid on term loans which were sanctioned in earlier years and used for the purpose of business including purchase of plant and machinery, expansion on marketing and distribution network, the interest of Rs. 14,31,882/- is fully allowable expense and the same may please be allowed. 11.3 The contentions raised by the Ld. Counsel challenging the impugned addition are carefully considered in the light of the facts of th....
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....k of Maharastra. This is a corporate loan, repayment of which has started in the FY 2005-06 and it was availed for expansion of business operations of the appellant in the year 2005. It is evident from the sanction letter of the SBI, the loan was not availed for any capital work in progress and therefore the Assessing Officer's observation that the amount pertains to interest on capital borrowed for CWIP is not correct. It is also noticed from the ledger account filed by the appellant, the said loan was repaid in December 2009 and the balance as on 31 March 2010 is nil. Therefore, in respect of this loan, the Assessing Officer is not justified in disallowing interest on the ground that a part of the loan was utilized towards capital work-in-progress for extension of corporate office. Accordingly, the disallowance of Rs. 5,12,027/- made by the Assessing Officer is not sustainable and the same is hereby deleted. 11.3.2 Thus, out of the total disallowance of interest of Rs. 14,31,882/- made by the AO, disallowance to the extent of Rs. 9,19,855/- is sustained. Appellant gets consequential relief of Rs. 5,12,027/- ( 14,31,882-9,19,855) on this ground. Ground of appeal No. 8 sta....
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.... sanctioned as above by SBI was Rs. 10.75% per annum and therefore the same rate of interest was adopted for arriving at the interest cost for funds used by the appellant for repayment of loan. Accordingly, a sum of Rs. 1,95,442/- as worked out in the above chart was disallowed and added back to the total income of the appellant. 12.2 In the present proceedings Ld. Counsel submitted that the decision of Hon'ble High Court of Punjab and Haryana in the case of Abhishek Industries reported in 286 ITR 1 referred by the Assessing Officer basically relates to utilization of borrowed funds for interest free advances to sister concern. It is submitted that in case of appellant company the facts are totally different and there is no diversion of loan funds to sister concerns as interest free advances and the loan funds sanctioned by the bank had been used for the same purpose for which same has been sanctioned and the loan was sanctioned for business purpose and hence the case quoted by the Assessing Officer is totally different from the facts of the appellant's case. It is reiterated that the appellant company has not advanced any amount to its sister concerns or any other party c....
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.... sec. 36 (1)(iii), the interest to the extent of Rs. 1,88,561/- was confirmed after excluding interest of Rs. 6,881/- relatable to the repayments made in February/ March 2010. Ground of appeal No. 9 is partly allowed. 13. Ground of appeal No. 10 states that the Assessing Officer erred in disallowing an expenditure amounting to Rs. 9,75,826/- being proportionate interest expenditure on funds used for repayment of term loan borrowed from Axis Bank being expenditure of capital nature. 13.1 Assessing Officer also noticed that the appellant has utilized the following amounts for repayment of loan taken for WIP and Citiotels and therefore interest on proportionate part of funds utilized is required to be capitalized towards the cost of asset not put to use and the same cannot be allowed as revenue expenses. The disallowance on this ground was worked out by the Assessing Officer in the case of project loans availed from Axis Bank as under : Project loans Axis Bank; Date Amount (Rs.) Rate Days Interest (Rs.) 01.04.2009 521129.3 14.50% 365 75563.75 04.04.2009 100000 14.50% 362 14380.82 16.04.2009 393593.7 14.50....
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....xparsion started by the appellant company and interest part of this loan debited by the bank is already capitalized by the assessee company as project cost of Hinjewadi Project in the books of the company and has not claimed it as Revenue Expenditure and not debited to profit and loss account of the Company. It is argued that as the interest is already capitalized by the appellant company, there is no question of addition of interest on proportionate basis and hence the disallowance wrongly made by the Assessing Officer may please be deleted fully amounting to Rs. 9,75,826/-. In support of its claim, the appellant is also stated to have furnished details of finance charges capitalized during the year for use of funds for capital assets. 13.3 The submissions made by the Ld. Counsel are carefully examined with reference to the facts of the case and the details of the loans on which the interest was paid by the appellant. The interest of Rs. 9,75,826/- was disallowed by the Assessing Officer on the ground that the part of the cash credit funds were utilized for repayment of Axis Bank project loan taken for capital WIP and new Hotel Project i.e towards the cost of assets not p....