TaxTMI 
TaxTMI 
2025 (3) TMI 1722
X X X X Extracts X X X X
X X X X Extracts X X X X
....the I.T. Act, on account of bogus purchase to the tune of Rs. 11,72,002/- and unexplained investment of Rs. 17,36,618/- 2. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made on account of depreciation claimed on non-existing assets. 3. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of interest paid to bank u/s.24(b) of the I. T. Act, without appreciating the findings of the Assessing Officer that the loan amount was not used for construction of building. 4. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the AO be restored." 3. The relevant facts in brief are that the Assessee, a company engaged in the business of software, digital equipment and LED lights, filed return of income for the Assessment Year 2009-2010 on 17/08/2009 declaring total income of INR. 23,69,950/-. The return was processed under Section 143(1) of the Act. Subsequently, the case of the Assessee was reopened under Section 147 of the Act by issuing notice, dated 26/03/2014, under Section 148 of the Act. The reassessment proceed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e CIT(A) deleting disallowance of depreciation claimed by the Assessee in respect of computer. 9. While framing assessment, the Assessing Officer disallowed deprecation of INR. 3,51,600/- claimed by the Assessee under Section 32 of the Act in respect of computer purchased from M/s Vasant Impex Private Limited for a consideration of INR. 11,72,002/-holding the same to be bogus purchase on the basis of information received from the Sales Tax (VAT) Department, State of Maharashtra. In appeal, the CIT(A) deleted the disallowance of deprecation holding that the Assessee had provided all the relevant documents and details. Merely because M/s Vasant Impex had not filed return of income, would not lead to a conclusion that the purchase was bogus. Being aggrieve the Revenue has carried the issue in appeal before the Tribunal. 10. We have heard both the sides and have perused the material on record. 11. We find that the Assessee had furnished the following documents to support the transaction of purchase of computer from Vasant Impex (a) purchase invoice, (b) delivery challan, (c) receipt for part payment of INR. 5.72 Lacs and Bank Statement showing payment of entire purchase consid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y submitted vide our letter dated 2nd September 2014 a) Purchase invoice from Vasant Impex Pvt. Ltd. for Laptop Sony Invoice No. V/489 and Invoice for prompt Computers IBM model Invoice No. V/719 b) Delivery challan of Lap Top Sony V 10 c) Receipt for Rs. 5.72 lacs from Vasant Impex d) Bank statement showing payment to Vasant Impex by account payee cheque is highlighting Point No 1 is regarding fixed assets The movable assets are located at registered office address only. In respect of purchase made from Vasant Impex Pvt. Ltd.: Working of depreciation claimed of Rs. 3,51,600/- on these fixed assets purchase is attached. As the assets have purchase post 30th September 50% depreciation has been claimed during the year. No set-off of VAT claimed in respect of aforesaid purchases." 13. After taking into consideration the response of the Assessee, the Assessing Officer concluded that the Assessee had failed to prove the geniuses of the purchase transaction under consideration. Accordingly the Assessing Officer rejected the claimed of depreciation of INR. 3,51,600/- holding that the Assessee had claimed d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as engaged in providing bogus bills without delivery of goods and its director had confessed to the same by way of affidavit filed before the Maharashtra VAT Authorities. The summons issued by the Assessing Officer under Section 133(6) of the Act were also returned un-served. Therefore, we are of the considered view the Assessing Officer was correct in rejecting the purchase transaction under consideration as non-genuine and rejecting the Assessee's claimed of depreciation of INR. 3,51,600/- in respect of the same. Accordingly, we set aside the order passed by the CIT(A) and reinstate the disallowance of deprecation of INR 3,51,600/- made by the Assessing Officer. Thus, Ground No.2 raised by the Revenue is allowed. Ground No. 3 16. Ground No.3 is directed against the order of the CIT(A) deleting the disallowance of INR. 45.07 Lacs made by the Assessing Officer in respect of interest paid to bank invoking provisions contained in Section 24(b) of the Act. 17. The Assessing Officer noted that during the relevant previous year the Assessee had claimed deduction for interest of INR. 10,72,526/-paid to on borrowed capital while computing business profits, and deduction of INR. 4....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsferred its loan account from Canara Bank to Corporation Bank. The Corporation Bank Loan Sanction Letter Dated 21.07.2004 states that the purpose as 'project envisaging manufacturing of digital printers and setting up of software development centre at an estimated cost of Rs. 1419 lakhs and security against the same is Plot B 13. 8.7 As the property over plot B-13 has been given on rentals, the income therefrom was shown under sec 22 as Income from House Property. The details of House Property Income as per the computation of the Income as submitted by the appellant company and as assessed by the AO is as follows xx .................................xx 8.8. xx .................................xx 8.9 It is seen from the fixed assets schedule forming part of financial statements the total cost of Land and Building is Rs. 15,63,66,063 (Freehold land value Rs. 1,54,44,035 plus Building worth Rs. 11,09,22,028) while the total loan sanctioned / availed is Rs. 700 Lakhs only. Further, the appellant has no other major assets for which term loan can be sanctioned/utilised. The Total fixed assets of the company as on 31.03.2009 is Rs. 18.20 crores and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Term Loan Schedule, Building Capitalisation Schedule (Page 317-319) (f) Corporation bank letter dated 20.08.2015 confirming the loan availed and the interest paid (Page 363) 20. From the above material it emerges that the interest paid during the construction stage of the building amounting to INR. 1,71,76,323/- was capitalised and 1/5th of the same (i.e. INR. 34,35,265/-) was claimed as interest cost during the relevant previous year. Further, interest cost of INR. 10,72,526/- incurred during the relevant previous year and pertaining to post construction period was claimed as deduction while computing income under the head 'Income from House Property' and the same was added back while computing income under the head 'Profits & Gains of the Business or Profession'. Thus, clearly no double deduction of interest expenses of INR. 10,72,526/- was claimed by the Assessee. It is also clear that Initially, the term loan of INR. 400 Lakhs was availed by the Assessee from Canara Bank for construction of building. In the year 2004, Corporation Bank agreed to provide foreign currency term loan of INR. 700 Lakhs to the Assessee for construction/setting up of the office building [....