AMOX COMMUNICATION & CABLE PRIVATE LIMITED,ASSAM vs. ACIT CIR-3 GUWAHATI, GUWAHATI
Facts
The Assessing Officer (AO) disallowed an amount of Rs. 23,60,240/- which was claimed by the assessee as interest paid on loans for acquiring plant and machinery, treating it as capital expenditure because the assets were not allegedly used during the year. The CIT(A) upheld this addition, noting that the interest should be capitalized until the assets are put to use, and the assessee failed to provide specific details regarding bifurcation of interest or asset usage dates.
Held
The Income Tax Appellate Tribunal (ITAT) observed that the assessee presented new documents not previously before the lower authorities. Considering the interests of substantive justice and the need for fresh verification of these new evidences, the Tribunal set aside the impugned order and remanded the matter back to the file of the AO for fresh assessment.
Key Issues
Whether interest paid on loans for acquiring plant and machinery, not yet put to use, should be disallowed and capitalized, and if the assessee can submit fresh evidence at the appellate stage to challenge such disallowance.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 36(1)(iii) of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI
IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI (VIRTUAL HEARING AT KOLKATA)
SHRI MANOMOHAN DAS, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 88/GTY/2025 Assessment Year: 2017-18 Axom Communications & Cable Private Limited, 5th Floor, Surya Tower, Ulubari B, Baruah Road, Guwahati Kamrup – 781007, Assam, Guwahati [PAN: AAKCA1364Q] .....................…...………… Appellant vs. ACIT, Cir-3, Guwahati, Aayakar Bhavan, Christianbasti, G.S. Road, Guwahati - 781007 ...…..….......................... Respondent Appearances by: Assessee represented by : Chetan Agarwal, AR Department represented by : Kausik Ray, JCIT Date of concluding the hearing : 07.08.2025 Date of pronouncing the order : 11.08.2025
ORDER PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This appeal arises from order dated 29.03.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi.
1.1 In this case, the Ld. AO has passed a brief order in which an addition of Rs. 23,60,240/- has been made on account of interest paid proportionately against plant and machinery which was not allegedly used during the year.
I.T.A. No. 88/GTY/2025 Axom Communication & Cable Private Limited 1.2 The assessee carried this matter in appeal before the Ld. CIT(A) where he could not succeed mainly because of finding in the impugned order as under:
“5.3 Ostensibly the appellant has charged interest of Rs.23,60,240/- in P & L Account. Undoubtedly the appellant has taken loan of more than Rs.9 crores and purchased new plant & machinery and also put the same into use during the year under consideration. The AO disallowed interest as the interest on loan for purchase of WIP assets is not qualified to be charged in the P & L Account. From the provisions of section 36(1)(iii) it is clear that any interest paid on loan for purchase of plant & Machinery is to be capitalized till it is first put to use. The appellant has nowhere mentioned that on what date such assets were put to use and what is the amount of interest paid till the date of first put to use the assets. In other words there is no bifurcation of interest paid which has been capitalized and which has been taken into P & L Account. Even during the appellate proceedings appellant did not clarify the correct position. Therefore, there is no infirmity in the order of the AO in disallowance of the interest of Rs. 23,60,240/-. 5.4 As the amount of interest of Rs.23,60,240/- is to be capitalized However, the appellant has given very vague reply therefore, it cannot be ascertained that such asset will fall in which category of the depreciable asset. Further, the appellant has not asked for depreciation on capitalized amount. 1.2 Aggrieved with this action of Ld. CIT(A), the assessee has approached the ITAT with the following single ground of appeal:
“1. The Ld. CIT(A) has erred in law as well as on fact in upholding an addition of Rs. 23,60,240/- being made by Ld. AO by treating interest paid on loans for acquiring plant & machinery claimed in profit and loss account as capital expenditure.” 2. Before us, the Ld. AR presented a paper book running into 56 pages which contained additional evidences which were neither before the Ld. AO or the Ld. CIT(A). The Ld. AR attempted to demonstrate that the authorities below had mis-directed themselves in terms of working out the impugned disallowance.
2.1 The Ld. DR pointed out that none of the documents contained in the paper book were before any of the authorities below and hence he would have no objection in case this matter was to be remanded back to the file of Ld. AO for fresh verification and then passing an assessment order.
I.T.A. No. 88/GTY/2025 Axom Communication & Cable Private Limited 3. We have carefully considered the rival submissions and have also gone through the records. We find that the assessee has presented a number of new documents before us, albeit without a proper application under Rule 29 of the ITAT Rules. Be that is may, it is felt that in the interests of substantive justice this matter deserves to be remanded back to the file of Ld. AO for fresh assessment, after considering the details and documents that the assessee would be expected to file before him. Accordingly, we set aside the impugned order and remand this matter back to the file of Ld. AO, as discussed above.
In result, this appeal is allowed for statistical purposes.
Order pronounced on 11.08.2025
Sd/- Sd/- [Manomohan Das] [Sanjay Awasthi] Judicial Member Accountant Member Dated: 11.08.2025 AK, Sr. PS Copy of the order forwarded to: 1. The Appellant 2. The Respondent 3. CIT(A)- 4. CIT- 5. CIT(DR)
//True copy// By order
Assistant Registrar, Kolkata Benches
