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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) – 3, Coimbatore, dated 27.05.2016 and pertains to assessment year 2012-13.
This appeal was fixed for hearing on 06.12.2016. Since on one appeared, it was adjourned to 14.03.2016. On 14.03.2016 also no one appeared for the assessee. The appeal was adjourned to 25.04.2017 and notice was issued by RPAD. On 25.04.2017 also no one appeared for the assessee and the Registry has placed on record an adjournment application said to be received from an advocate. Even though the assessee had not given any Vakalat to the advocate and the advocate’s name was also not mentioned in the adjournment petition, this Tribunal again adjourned the matter to 29.06.2017.
When the appeal was taken up for hearing on 29.06.2017, no one appeared for the assessee. The notice of hearing was also served on the assessee by RPAD and the Registry has placed on record the postal acknowledgement as proof of service of notice.
On 29.06.2017 also a similar adjournment petition was received signed by an advocate without mentioning his name in the application. This time also no Vakalat was filed by the said advocate who filed the adjournment petition. Since the name of the advocate was not disclosed in the adjournment petition and the assessee has also not given any Vakalat to any advocate, this Tribunal considered the adjournment petition filed by the so-called advocate is unauthorized, therefore, the same was rejected.
Accordingly, this Tribunal proceeded to hear the Ld. Departmental Representative and dispose of the appeal on merit.
Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that the only issue arises for consideration is disallowance of interest on the loan borrowed by the assessee for setting up of poultry unit at Kodanthur. According to the Ld. D.R., the assessee is in the business of poultry. In order to set up a new unit at Kodanthur, the assessee borrowed a sum of `3 Crores from bank. The assessee claimed the interest on the above said loan of `3 Crores as revenue expenditure while computing the total income.
The Assessing Officer found that the assessee could not set up the new unit at Kodanthur due to objection raised by the local people and the project was shifted to Semur. Even at Semur, the project was not completed and the poultry unit was not put to use, therefore, according to the Ld. D.R., the Assessing Officer disallowed the claim of the assessee on the ground that the interest expenditure has to be capitalized in view of proviso to Section 36(1)(iii) of the Income-tax Act, 1961 (in short 'the Act').
The Ld. Departmental Representative further submitted that the CIT(Appeals) found that the assessee completed the construction of poultry unit and put to use the same, therefore, he allowed the claim of the assessee. On a query from the Bench, how the CIT(Appeals) came to a conclusion that the cost of civil `24,32,642/- construction was and cost of non-civil was `3,28,15,415/-? The Ld. D.R. submitted that it is not known how the CIT(Appeals) came to know these details. The Ld. D.R. submitted that nothing is available on record.
We have considered the submission of the Ld. Departmental Representative and perused the material available on record. The Assessing Officer found that the assessee has not constructed the poultry unit during the year under consideration, therefore, the interest on borrowed funds of `3 Crores cannot be allowed as revenue expenditure. However, the CIT(Appeals) found that the poultry was set up before the financial year and the same was put to use and accordingly, he allowed the claim of the assessee. The CIT(Appeals) found that the civil construction cost was `24,32,642/- and non-civil cost was ` 3,28,15,415/-. It is not known from where the CIT(Appeals) got this figure. Therefore, this Tribunal is of the considered opinion that the matter needs to be verified. Accordingly, the orders of the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh and find out the exact cost incurred by the assessee on civil construction and non-civil and also find out whether the poultry sheds were constructed actually and put to use and, thereafter, decide the issue in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the Revenue is allowed for statistical purposes.