Commissioner Of Income Tax v. Arvind Intex Ltd.....opponent(S

O/TAXAP/500/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 500 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus ARVIND INTEX LTD.....Opponent(s) ================================================================ Appearance: MR MANISH BHATT, SENIOR COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MS SALONI A PATEL, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 11/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘a’ (hereinafter referred to as ‘the Tribunal’) dated 25.08.2006 in ITA No. 2092/Ahd/2001 for the Assessment Year 1996-97, the revenue has preferred the present Tax Appeal. 1.1This appeal was admitted by this Court on 20.09.2007 for consideration of the following substantial question of law: “Whether the Appellate Tribunal is right in law and on facts in confirming the order of the CIT(A) allowing the claim of Rs. 1,37,61,958/- u/s 36(1)(iii) of the Act, in respect of interest incurred on borrowed funds utilised for purchase of machinery?” 2. The assessee firm is engaged in the business of manufacturing yarns using a process called Ring Spinning process. During the course of assessment proceedings, the assessing officer noticed that the assessee had borrowed funds for purchase of machinery on which interest charged was paid and the same was capitalized in the books of accounts and that the assessee claimed this amount as revenue expenditure in the return of income. The Assessing Officer rejected the claim of the assessee. On appeal the CIT (Appeals) held that treatment in account does not determine the allowability of an expenditure and interest is allowable as revenue expenditure. 2.1 On appeal before the Tribunal, by impugned order, the Tribunal upheld the order of CIT(A). Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 3. The issue involved in the present Tax Appeal is now squarely governed by the decision of this Court in the case of Gujarat State Fertilizer and Chemicals Ltd v. ACIT reported in 313 ITR 244 (Guj) wherein this Court has held in favour of the assessee. 4.Mr. Manish Bhatt, learned Senior Advocate appearing with Ms. Mauna Bhatt, learned advocate on behalf of the revenue is not in a position to dispute the above and is not in a position to show and/or point out any contrary decision. 3. The issue involved in the present Tax Appeal is now squarely governed by the decision of this Court in the case of Gujarat State Fertilizer and Chemicals Ltd v. ACIT reported in 313 ITR 244 (Guj) wherein this Court has held in favour of the assessee. 4.Mr. Manish Bhatt, learned Senior Advocate appearing with Ms. Mauna Bhatt, learned advocate on behalf of the revenue is not in a position to dispute the above and is not in a position to show and/or point out any contrary decision. 5. Having heard learned advocates appearing on behalf of the parties and the question posed for consideration before us reproduced hereinabove and considering the decision of this Court in the case of Gujarat State Fertilizer and Chemical ltd. (Supra), the question which is raised in the present appeal is required to be answered in favour of the assessee. We are not giving further elaborate reasons for the same as in the case of Gujarat State Fertilizer and Chemical (Supra) this Court has already answered the question in favour of the assessee. Accordingly, the question is answered in the affirmative i.e. against the appellant – revenue and in favour of the assessee. 6. In view of the above, the impugned judgment and order passed by the Tribunal is confirmed. Hence, the present Tax Appeal is dismissed. (K.S.JHAVERI, J.) divya (K.J.THAKER, J)