Income Tax Appellate Tribunal - Ahmedabad
Sanskar Industries Pvt. Ltd.,, ... vs The Dy. Commissioner Of Income Tax, ... on 4 June, 2018
ITA No.3132/Ahd/2016
A.Y. 2012-13
Page 1 of 3
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA No.3132/Ahd/2016
Assessment Year: 2012-13
Sanskar Industries Pvt. Ltd., vs. Dy. Commissioner of Income Tax,
197/3/4, Ambica House, Circle - 4(1)(1), Ahmedabad.
Ramnath Vas, Shahwadi,
Narol, Ahmedabad - 382 405.
[PAN - AAPCS 4326 M]
(Appellant) (Respondent)
Appellant by : Shri Ashok Dhariwal, A.R.
Respondent by : Shri Dinesh Singh Sr. D.R.
Date of hearing : 26.04.2018
Date of pronouncement : 04.06.2018
ORDER
PER RAJPAL YADAV, ACCOUNTANT MEMBER:
1. Assessee is in appeal before the Tribunal against the order of ld. CIT(A) dated 29th September, 2016 passed for A.Y. 2012-13. The assessee has taken 6 grounds of appeal which are not in consonance with Rule No.8 of the ITAT Rules, 1963 and they are descriptive and argumentative in nature.
2. In brief, grievance of the assessee is that the ld. CIT(A) has erred in confirming the addition of Rs.4,80,000/- which was added by the Assessing Officer by treating notional interest income on advance given for purchase of flats.
3. The brief facts of the case are that the assessee has filed its return of income th on 18 September, 2012 declaring total income of Rs.(-) 46,54,248/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) of the Act was issued on 23.09.2013. On scrutiny of the same, it revealed to the Assessing Officer that the assessee has invested a sum of Rs.40,00,000/- on 01.04.2011 towards advance for purchase of land. According to the Assessing Officer, the assessee has made payment of alleged Rs.40,00,000/- out of interest bearing funds, since it was a capital asset, and therefore, expenditure in the shape of ITA No.3132/Ahd/2016 A.Y. 2012-13 Page 2 of 3 interest could not be allowed. He notionally calculated the interest expenditure @ 12% on such advance and made addition of Rs.4,80,000/-. By this amount he has reduced the losses claimed by the assessee in the return.
4. Appeal to the CIT(A) did not bring any relief to the assessee.
5. Before the Tribunal the assessee contended that it has received share capital of Rs.66,50,000/- upto 24.03.2011. It has given advance of Rs.40,00,000/- for purchase of land on 26.03.2011. According to the assessee whatever loans it has taken that has been exclusively used for the purpose of business and not a single rupee was diverted towards purchase of land. Therefore, according to the assessee, no notional disallowance of interest expenditure ought to have been made.
6. The ld. Departmental Representative, on the other hand, relied upon the orders of the Revenue authorities below.
7. We have duly considered the rival contentions and gone through the records carefully. Ld. Revenue Authorities have not recorded any specific finding as to how the assessee has used the interest bearing funds for purchase of land. The case of the assessee is that it has made advance payment towards purchase of land which was to be used for the construction of a factory building. The question is whether such advance was given after commencement of the business or before commencement of the business. If the advance was given before commencement of the business then the interest expenditure attributable to such advance ought to be capitalised but if the advance was given out of interest free funds then how notional interest expenditure could be assumed and disallowance can be made. No specific finding has been recoded to this aspect by the Revenue Authorities below. Therefore, we allow the appeal of the assessee for statistical purposes by remitting this issue to the file of the ld. Assessing Officer for re-adjudication. Ld. Assessing Officer shall pin point the exact loan amount taken by the assessee on which interest expenditure has been claimed, interest free funds available with the assessee and the advance made by it. After identifying all these three amounts he would decide whether interest bearing funds have been used for giving advance for purchase of land or not. The Assessing Officer will thereafter decide the issue in accordance with law.
ITA No.3132/Ahd/2016A.Y. 2012-13 Page 3 of 3
8. Appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on this 4th day of June, 2018.
Sd/- Sd/-
AMARJIT SINGH RAJPAL YADAV
(Accountant Member) (Judicial Member)
Ahmedabad, the 4 th day of June, 2018
PBN/*
Copies to: (1) The appellant (2) The respondent
(3) CIT (4) CIT(A)
(5) Departmental Representative (6) Guard File
By order
UE COPY
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad