Helio Engineering Private Limited, ... vs Assessee

अपीलाथ क ओर से / Appellant by : Shri. Gopal Krishna Raju, C.A यथ क ओर से / Respondent by : Shri. P. Radhakrishnan, IRS, JCIT.

सन ु वाई क तार ख/Date of hearing : 25.05.2015 घोषणा क तार ख /Date of Pronouncement : 19.06.2015

आदे श / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER

This appeal by assessee is directed against the order of the

Commissioner of Income Tax (Appeals)-II, Chennai dated 30.09.2013

for the assessment year 2009-2010.

:- 2 -: I.T.A.No.209/Mds/2014.

2. The only grievance of the assessee is regarding disallowance of

interest of D8,31,420/- paid by assessee on the term loan, which was

used for purchase of property which is yet to be put into use as on

31.03.2009. The Assessing Officer disallowed interest amount of

D8,31,420/- on the reason that the assessee used the loan amount for

the purchase of land which has not been put to use. According to

the Assessing Officer, the assessee made an advance of D84,96,220/-

which was paid on two occasions on 09.07.2008 and 12.07.2008 after

obtaining loan from bank. The assessee paid bank interest of

D9,78,576/-. On the proportionate interest on D84,96,220/- which

works out to D8,31,420/- as asset was not put to use, the Assessing

Officer considered the expenditure as capital asset and disallowed

the claim. Aggrieved, the assessee preferred an appeal before the

Commissioner of Income Tax (Appeals). On appeal, the Commissioner

of Income Tax (Appeals) confirmed the order of Assessing Officer.

Against this, the assessee is in appeal before us.

3. We have heard both the sides and perused the material

available on record. The ld. Authorised Representative pleaded that the

assessee purchased the land and used the same for the purpose of

storing its stock in trade. However, the Authorised Representative for :- 3 -: I.T.A.No.209/Mds/2014.

assessee not able to show any evidence reflecting date of purchase of

above land and also there is no iota of evidence placed regarding

storing of assessee's stock in trade in the impugned land. Further, in

view of Finance Act, 2003 which was brought out an amendment

w.e.f. 01.04.2004 consequent to which no deduction will be allowed in

respect of any amount of the interest paid, on capital borrowed for

acquisition of an asset for extension of existing business or profession

(whether capitalized in the books of account or not); for any period

beginning from the date on which the capital was borrowed for

acquisition of the asset till the date on which such asset, was first put

to use. In other words as per section 36(1)(iii) of the Act, any

expenditure incurred in relation to acquiring a capital or fixed asset is

to be capitalized and the only allowable deduction is by way of

depreciation of such capital assets. Hence, in this case, there is a

categorical finding by the Commissioner of Income Tax (Appeals) that

the land was not put to use upto 31.03.2009 and the cost of the land

is to be considered as capital asset only and the interest incurred on

the term loan, which was used for the purpose of making advance for

purchase of land, is capital expenditure and it cannot be allowed as

Revenue expenditure. Accordingly, this ground is dismissed.

:- 4 -: I.T.A.No.209/Mds/2014.

4. In the result, the appeal of the assessee in ITA

No.209/Mds/2014 is dismissed.

Order pronounced on Friday, the 19th day of June, 2015, at

Chennai.

Sd/- Sd/- (वी. दग ु ा! राव) (चं पज ू ार ) V. DURGA RAO (CHANDRA POOJARI) या"यक सद य / JUDICIAL MEMBER लेखा सद य/ ACCOUNTANT MEMBER

चे$नई/Chennai. %दनांक/Dated:19.06.2015. KV

आदे श क त(ल)प अ*े)षत/Copy to: 1. अपीलाथ /Appellant 2. यथ / Respondent 3. आयकर आयु,त (अपील)/CIT(A) 4. आयकर आयु,त/CIT 5. )वभागीय त न/ध/DR

6. गाड फाईल/GF.