DEPUTY COMMISSIONER OF INCOME-TAX vs. AJANTA INFRASTRUCTURE PVT. LTD., AURANGABAD

Heard both the parties. Case file perused.

The Revenue raises the following substantive grounds in the instant appeal : I. “On the facts and the circumstances of the case, the Ld. CIT(A) is correct in allowing the interest expenses to the 2 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. tune of Rs.2,07,73,671/- added by the AO as agreed by assessee, when the amount on which interest expenses are claimed are forwarded for non-business purpose. The Ld. CIT(A) did so without even calling for remand report and entertained additional evidences. II. On the facts and the circumstances of the case, whether the Ld. CIT(A) is correct in deleting the expenses of Rs.45,22,884/- disallowed by the A.O when it has been established by the A.O in the assessment order that such expenses relate to the purchase of properties which have not been purchased during the year and hence could have utmost been capitalized. III. On the facts and circumstances of the case, whether the Ld. CIT(A) is justified in allowing the depreciation of Rs.9,95,762/- on the vehicles, which are not owned by the company, without considering that section 32 of the Income Tax Act, 1961 has strictly stipulated that the ownership of vehicle is must before claiming of depreciation. IV. On the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the interest expenses of Rs.7,40,661/- on the vehicles not owned by the company.

It emerges during the course of hearing that the Revenue’s I and VI substantive grounds raise identical pleadings that the impugned disallowance u/s.36(1)(iii) qua the assessee’s interest claim of Rs.2,07,73,671/- and registration/stamp charges of Rs.47,22,150/-, had indeed 4 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. been made by the Assessing Officer on “agreed” basis and therefore, the same ought to have been affirmed by the CIT(A). We note in this factual backdrop that the CIT(A)'s detailed lower appellate discussion qua the instant former issue reads as follows :

We now advert to the Revenue’s foregoing substantive arguments. It emerges from a perusal of pages 4 and 5 of the assessment order dated 10.03.2014 that assessee in fact had nowhere given its consent in respect of the impugned disallowance. It rather claimed “capitalization” of the corresponding interest pertaining to the alleged interest 8 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. free advances with a further plea that the same had been invested for the purpose of purchasing properties in future only. Ms. Khare has also filed on record complete copy of the said letter dated 28.01.2014 wherein no such blanket agreement emerges as it is projected at the Revenue’s behest. Faced with the situation, we reject the Revenue’s instant first and foremost sole substantive ground seeking to revive section 36(1)(iii) interest disallowance of Rs.2,07,73,671/-.

The outcome of the Revenue’s VI sole substantive ground is also found to be no different when the assessee had made similar request of capitalization of the impugned registration fee and stamp duty charges than giving it’s consent for blanket disallowance in the relevant previous year. We thus affirm the CIT(A)'s detailed discussion regarding the Revenue’s I and VI substantive grounds. Rejected accordingly.

We now advert to the Revenue’s II substantive ground seeking to revive assessee’s expenditure claim of disallowance of Rs.45,22,884/- made by the Assessing Officer and deleted in the Ld. CIT(A)'s detailed discussion as follows :

The Revenue’s III and IV substantive grounds challenge correctness of the CIT(A)'s detailed discussion granting depreciation and interest deductions of Rs.9,95,762/- and Rs.7,40,661/-, respectively to the assessee as against the Assessing Officer’s action rejecting the same in the course of assessment. The Revenue vehemently argued in support of the assessment findings that assessee is neither entitled for claiming impugned depreciation nor these interest expenses once the vehicles in question had been purchased in the names of it’s directors only.

Coming the later interest limb disallowance of Rs.7,40,661/- claimed by the assessee, the very reasoning follows since this taxpayer only had been seeing the cost of these motor cars all along once the assets are recorded in it’s balance-sheet. The Revenue’s instant IV and V substantive grounds are rejected accordingly.

Lastly comes bad debts disallowance issue of Rs.1,75,47,667/- made by the Assessing Officer and deleted in the CIT(A)'s detailed discussion as follows :

We have given our thoughtful consideration to vehement rival stands against and in support of the impugned disallowance. We made it clear that this is not 19 I.T.A.No.1349/PUN/2016 M/s. Ajanta Infrastructure Pvt. Ltd., Aurangabad. even Assessing Officer’s case that the assessee’s impugned bad debts claim does not pertain to the amounts actually written off as such in the corresponding ledger accounts or it had not recognized the income therefrom in the past. All what the Assessing Officer has done is to simply conclude that the assessee had not filed the relevant details in respect of it’s claim, which in-turn, stands reversed in the CIT(A)'s foregoing detailed discussion. We thus quote hon’ble apex court’s landmark decision in TRF Ltd., vs. CIT [2010] 323 ITR 397 (SC) and conclude that the assessee has duly satisfied all the conditions of the impugned bad debt claim. This Revenue’s V substantive ground is also declined.

No other ground or arguments has been raised before us.

This Revenue’s appeal is dismissed.