2022 (1) TMI 690

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....n law the Ld.CIT(A) erred in deleting the disallowance of interest u/s 36(1)(iii) when the assessee during assessment proceedings has failed to produce the proofs of the machinery put to use when the onus was on the assessee to prove that the borrowed capital was actually put to use and there is commencement of a business from the installed machineries and asset as well as the working capital is also poured into the business ? 2. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) erred in not appreciating that the assessee has failed to justify through documentary evidences and supporting material the installation certificate or any other supportive documentary evidence inspite of sufficient opportunity gra....

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....xed assets were not put to use. The Assessing Officer also disallowed the depreciation and additional depreciation on such assets. The Assessing Officer had come to conclusion that the assets were not put to use taking into consideration the following facts : (i) That the proof of machinery put to use for the business purposes was not furnished. (ii) That the assessee company made an advance of Rs. 14,06,167/- to Kazu Company Ltd. towards testing and installation. (iii) The assessee company had worked at 20% of capacity only. 4. The Assessing Officer noticing that the appellant incurred interest expenditure of Rs. 10,54,08,247/- disallowed the same placing reliance on the provisions of section 36(1)(iii) of the....

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....ven an opportunity of hearing to the respondent-assessee before making the disallowance of deprecation on such assets. 9. We heard the rival submissions and perused the material on record. The issue in the first ground of appeal relates to the disallowance of interest paid on loans acquired for the purpose of acquisition of assets. The Assessing Officer concluded that the assets were not put to use taking into consideration the fact that the assessee company had worked at only 20 - 25% of its capacity and the advance was paid to Kazu Company Ltd. towards installation and testing of machinery. The fact that the assessee company worked at 20% of its capacity does not imply that the assets are not put to use. It is settled position of law o....