Commissioner Of Income Tax v. Nirma Limited....opponent(S

O/TAXAP/358/2014 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 358 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE Ms. JUSTICE HARSHA DEVANI andHONOURABLE Ms. JUSTICE SONIA GOKANI ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the 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 ?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 NIRMA LIMITED....Opponent(s) ================================================================Appearance: Mr. NITIN K MEHTA, ADVOCATE for the Appellant Mr. B S SOPARKAR, ADVOCATE for the Opponent ================================================================ CORAM: HONOURABLE Ms. JUSTICE HARSHA DEVANI and HONOURABLE Ms. JUSTICE SONIA GOKANI2nd September 2014 ORAL JUDGMENT (PER : HONOURABLE Ms. JUSTICE SONIA GOKANI) Following are the substantial questions of law, raised by the Revenue in the present Tax Appeal preferred under Section 260A of the Income-tax Act, 1961 {“the Act” for short} against the order dated 31[st] July 2013 passed by the Income Tax Appellate Tribunal, A-Bench, Ahmedabad {“the Tribunal” for short}. [1]“Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the A.O to decide for granting benefits of the netting to the assessee and further directing the Assessing Officer to allow expenses after verifying nexus with various income such as job charges of RS. 9,95,333/=, interest on ICD of Rs. 2,03,14,521/= and interest on other ICD of Rs. 7,51,56,923/=; interest on loan to staff Rs. 33,974/-; Insurance claim of Rs. 18,65,961/=; Exchange rate difference of Rs. 6,57,260/=; truck hire charges of Rs. 43,37,289/= and similar nature of interest or other incomes. (Mandali Division).” [2]“Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benefits of the netting to the assessee and further directing the Assessing Officer to allow expenses after verifying nexus with various income such as Interest income of Rs. 3,825/=; Truck hire charges of Rs. 2,40,000/= (Trikampura Division)”. [3]“Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benefits of the netting to the assessee and further directing the Assessing Officer to allow expenses after verifying nexus with various income such as Job charges of Rs. 25,590/=; F.D interest of Rs. 1,82,180/=; other interest Rs. 4,481/=; Insurance claim of Rs. 1,76,305/=; Misc. income of Rs. 30,716/=; truck hire charges of Rs. 1,45,796/= and similar nature of interest or other incomes. (Kanpur Division).” [4]“Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benefits of the netting to the assessee and further directing the Assessing Officer to allow expense after verifying nexus with various income such as F.D interest of Rs. 19,57,988/=; other interest of Rs. 3,79,776/=; insurance claim of Rs. 11,467/=; Misc. income of Rs. 81,773/=; truck hire charges of Rs. 6,95,471/= and similar nature of interest or other incomes (Indore Division).” [4]“Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benefits of the netting to the assessee and further directing the Assessing Officer to allow expense after verifying nexus with various income such as F.D interest of Rs. 19,57,988/=; other interest of Rs. 3,79,776/=; insurance claim of Rs. 11,467/=; Misc. income of Rs. 81,773/=; truck hire charges of Rs. 6,95,471/= and similar nature of interest or other incomes (Indore Division).” [5]“Whether the Appellate Tribunal is right in law and on facts in deleting the disallowance of interest from debtors of Rs. 25,92,658/= (Mandali division) made by the Assessing Officer for the purpose of calculation of deduction under section 80HH & 80HHC of the I.T Act and further directing the Assessing Officer to allow the same while relying upon its own decisions in earlier assessment years 1994-95 and 1995-96 which have not reached finality and without considering the fact that such expenses incurred from the business income only and not for earning income liable to be excluded ?” [6]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) deleting the disallowance of Rs. 2,50,04,230/= made by Assessing Officer on account of sale of various items such as sale of poster paper (Rs. 612567/-), sale of iron scrap (Rs. 915701/-), sale of gunny bags (Rs. 85,05,602/-); LDO sale (Rs. 7820/-); Soap stone bardan (Rs. 13,20,112/-), misc. sales (Rs. 1,33,949/-), compund sale (Rs. 78,900/-), waste paper craft sale (Rs. 41,33,693/-); plastic waste sale (Rs. 35,23,861/-); barrel sale (Rs. 25,22,025/-); HCO sales (Rs. 32,50,000/-) in respect of Mandali Division of the assessee for the purpose of calculation of deduction under sections 80IA of the I.T Act and directing A.O to allow the same, while relying upon its own decisions in the cases of Nirma Limited for A.Ys 1993-94; 1994-95 and 1995-96 have not reached finality and without considering the fact that such expenses incurred from the business income only and not for earning income liable to be excluded ?” [7]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) deleting the disallowance of Rs. 1,14,89,338/- made by the Assessing Officer on account of sale of various items such as sale of plastic waste paper (Rs. 1,83,490/-); sale of iron scrap (Rs. 22,223/-); sale of gunny bags (Rs. 1,08,85,250/-); Misc. sales (Rs. 1,51,155/-); sale of bardan (Rs. 2,46,220/-) in respect of Trikampura division of the assessee, for the purpose of calculation of deduction under Section 80IA of the I.T Act and directing Assessing Officer to allow the same, while relying upon its own decisions in the cases of Nirma Limited for A.Y 1993-94; 1994-95 and 1995-96 have not reached finality and without considering the fact that such expenses incurred from the business income only and not for earning income liable to be excluded ?” [8]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) deleting the disallowances of Rs. 66,84,193/- made by the Assessing Officer on account of sale of various items such as of plastic waste (Rs. 53,341/-); sale of gunny bags (Rs. 63,92,021/-); sale of other bardan (Rs. 2,05,437/-); sale of iron scrap (Rs. 33,394/-) in respect of Kanpur Division of the assessee, for the purpose of calculation of deduction under section 80HH of the I.T Act and directing A.O to allow the same, while relying upon its own decisions in the cases of Nirma Limited for A.Ys 1993-94; 1994-95 & 1995-96 have not reached finality and without considering the fact that such expenses incurred from the business income only and not for earning income liable to be excluded ?” [9]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) deleting the disallowances of Rs. 1,67,83,302/- made by Assessing Officer on account of sale of various items such as sale of plastic waste (Rs. 44,524/-); sale of iron scrap (Rs. 35,909/-); sale of gunny bags (Rs. 63,94,562/-); sale of Bardan (Rs. 3,850/-); sale of soap stone (Rs. 3,01,890/-); Sale of Aluminum (Rs. 1,400/-); sale of Waste (Rs. 1,986/-) in respect of Indore Division of the assessee, for the purpose of calculation of deduction under section 80IA of the IT Act and directing A.O to allow the same, while relying upon its own decisions in the cases of Nirma Limited for A.Ys 1993-94; 1994-95 and 1995-96 have not reached finality and without considering the fact that such expenses incurred from the business only and not for earning income liable to be excluded ?” [10]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of the CIT (A) to recalculate interest expenditure of Rs. 7,07,49,788/= in respect of Mandali Division; Rs. 42,101/= in respect of Trikampura Division; Rs. 1,39,903 in respect of Kanpur Division and Rs. 37,795/= in respect of Indore Division from the interest income while working out the deductions under Section 80I, 80IA and 80HH of the Act and further directing the Assessing Officer to allow netting, if the assessee is able to establish the nexus between interest expenditure and interest income ?” [11]“Whether the Appellate Tribunal is right in law and on facts in restoring the issue back to the Assessing Officer to decide for granting benefits of the netting aspect and to allow netting, if the assessee is able to establish the nexus between sale expenditure and sale income for the purpose of computing deduction allowable to assessee under Sections 80I & 80HH of the IT Act while setting aside the order of CIT (A) directing not to exclude income from sale of diesel of Rs. 1,10,24,937/= in respect of Mandali Division while working out deduction under Sections 80I & 80HH of the IT Act ?” [12]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) deleting the disallowance of Soda Ash Project Interest expenses of Rs. 8,08,21,658/= and Rs. 27,35,94,647/= Lab Project interest expenses ?” [13]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) deleting the disallowance of Soda Ash Project Expenses [other than interest expenses] of Rs. 1,33,31,447/= and Rs. 3,46,83,209/= (other than interest expenses) Lab Project Interest expenses ?” [14]“Whether the Appellate Tribunal is right in law and on facts in confirming the order of CIT (A) directing the Assessing Officer to allow depreciation on the expenses claimed for Rs. 9,41,53,106/= in respect of Soda Ash Project expenses and Rs. 36,60,38,78/- (in respect of Lab Project expenses), if they are held to be treated as of expenditure in capital nature ?” 2.We have heard learned senior counsel Shri S.N Soparkar with Shri Bandish Soparkar, learned advocate for the respondent and Mr. Nitin Mehta, learned standing counsel for the Department. 3.At the outset, it needs to be noted that this Tax Appeal arises for the A.Y 1998-98 in a case of respondent-company which is engaged in the business of manufacturing and marketing toiletry products. The company filed its return of income declaring the total income at Rs. 43,63,56,523/= after claiming deductions under Sections 80I, 80IA, 80HH & 80HHC of the Act. The assessment was completed after scrutiny, determining the total income at Rs. 113.17 Crores [rounded off ]. 4.Being aggrieved, the assessee preferred an appeal before the Commissioner of Income-Tax {Appeals}-IX, Ahmedabad which partly allowed such appeal of the assessee. the Department. 3.At the outset, it needs to be noted that this Tax Appeal arises for the A.Y 1998-98 in a case of respondent-company which is engaged in the business of manufacturing and marketing toiletry products. The company filed its return of income declaring the total income at Rs. 43,63,56,523/= after claiming deductions under Sections 80I, 80IA, 80HH & 80HHC of the Act. The assessment was completed after scrutiny, determining the total income at Rs. 113.17 Crores [rounded off ]. 4.Being aggrieved, the assessee preferred an appeal before the Commissioner of Income-Tax {Appeals}-IX, Ahmedabad which partly allowed such appeal of the assessee. 5.Both – the Revenue as well as the assessee, preferred appeals before the Tribunal which, by a common order dated 31[st] July 2013, allowed the appeal of the assessee and partly allowed the appeal of the revenue, dismissing the cross objection of the assessee. Aggrieved by the same, Revenue is before this Court raising aforementioned questions of law for our consideration. 6.Both sides have extensively made submissions. It is pointed out to us that all the issues are covered by a decision of this Court rendered in case of CIT v. Nirma Limited [Tax Appeal No. 811 of 2013 : Decided on 27.1.2014]. 7.As far as questions {1}, {2}, {3}, {4}, {10} & 11 in the present Tax Appeal are concerned, they were raised in Tax Appeal No. 811 of 2013 as Questions No. {1}, {4}, {8}, {10} & {11}. It is to be noted that Question [1] raised herein is the combination of Questions [1] & [4] in Tax Appeal No. 811/2013. The Court, while dealing with these questions relied upon decision rendered in Tax Appeal No. 810 of 2013, wherein, the Revenue's appeal had been rejected. It would be apt to reproduce the finding and observations concerning these questions, thus - “Insofar as question Nos.1, 4, 8, 10 and 11 are concerned, they have a common element, namely, whenever certain income is to be excluded for the purpose of deduction under section 80-I, 80-IA and 80HH, etc. gross income is to be excluded or only the net thereof is the question. In a separate order passed by us today in Tax Appeal No.810 of 2013, we have rejected the Revenue’s appeal making following observations : “The question is when certain income of the assessee is excluded from the claim of deduction under section 80I or 80HH of the Act, should the gross income be excluded or should it be only net, that is, total receipt minus the expenditure incurred by the assessee for earning such income which should be so excluded. Such a question in the context of deduction under section 80HHC came up for consideration before the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd v. CIT, 343 ITR 89 (SC). The Supreme Court held that for the purpose section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Heavy reliance was placed in the case of Topman Exports v. CIT, 342 ITR 49 (SC). Extending such logic, it was further held that even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act. Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. It was observed as under : section 80HHC of the Act, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value of less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Heavy reliance was placed in the case of Topman Exports v. CIT, 342 ITR 49 (SC). Extending such logic, it was further held that even other amounts, such as, interest or rent when are to be excluded for the purpose of explanation (baa) to section 80HHC of the Act. Ninety per cent of not the gross rent or gross interest, but the net thereof shall have be excluded. It was observed as under : “If we now apply Explanation (baa) as interpreted by us in this judgment to the facts of the case before us, if the rent or interest is a receipt chargeable as profits and gains of business and chargeable to tax under section 28 of the Act, and if any quantum of the rent or interest of the assessee is allowable as as expense in accordance with sections 30 to 44D of the Act and is not to be included in the profits of the business of the assessee as computed under the head “Profits and gains of business or profession”, ninety per cent of such quantum of the receipt of rent or interest will not be deducted under clause (1) of Explanation (baa) to section 80HHC. In other words, ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which has been included int eh profits of business of the assessee as computed under the head “Profits and gains of business or profession”, is to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profits of the business.” In view of such decision, question No.3 raised by the Revenue gets automatically answered since the amounts referred to in the said question are to be excluded for the purpose of deduction under section 80HHC of the Act. Learned counsel for the Revenue vehemently contended that the ratio of the decision in the case of ACG Associated Capsules Pvt. Ltd (supra) cannot be applied to a situation where the exclusion from the claim of deduction relates to section 80HH or section 80-I of the Act. He strenuously urged that the language used in both the sets of provisions are different. Section 80HHC is also vitally different and that therefore the concept of netting may not be automatically applied to deduction under section 80HH and 80-I of the Act. He submitted that number of tax appeals have been admitted by this Court on this issue and this appeal may also be likewise admitted. He drew our attention to the order dated 6.5.2013 passed by this Court in the case of Bloom Decor Ltd. In Tax Appeal No.447 of 2013 where at the instance of the assessee, similar question was not considered. On the other hand, learned counsel Shri Soparkar for the assessee, in addition to relying on the decision in the case of ACT Associated Capsules Pvt. Ltd. (supra), also placed heavy reliance on an order dated 30.11.2013 in Tax Appeal No.213 of 2006 in the case of Rajoo Engineers Ltd. in which the Revenue’s appeal raising such a question came to be dismissed relying on the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). The counsel also relied on a decision of the Delhi High Court in the case of Essel Shyam Communication Ltd. v. Commissioner of Income tax, (2012) 28 taxmann.com 243 (Delhi), in which in detailed consideration, relying on the decision of the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra), exclusion was approved for deduction under section 80-IA of the Act. Having heard the learned counsel for the parties, we see no reason to entertain this tax appeal. The Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra) has already laid down the foundation for the logic for excluding the net profit and not the gross profit from of Essel Shyam Communication Ltd. v. Commissioner of Income tax, (2012) 28 taxmann.com 243 (Delhi), in which in detailed consideration, relying on the decision of the Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra), exclusion was approved for deduction under section 80-IA of the Act. Having heard the learned counsel for the parties, we see no reason to entertain this tax appeal. The Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra) has already laid down the foundation for the logic for excluding the net profit and not the gross profit from the claim of deduction when it is found that the source of income does not qualify for such deduction under section 80HHC of the Act. It is true that section 80HHC represents vastly different scheme of deduction and also provides for complex formula for deriving for the eligible profit for deduction under different situations depending on whether the exporter is also engaged in the local business or not. However, this distinction would not be material insofar as central question of exclusion of certain profit from the activity which is not eligible for deduction under section 80HH and 80-I are concerned. The logic being when the profit is being excluded from the claim of deduction, not the gross profit but the net thereof, that is the gross profit minus the expenditure incurred for earning such profit should be excluded. That is precisely how this Court in the case of Rajoo Engineers (supra) viewed the situation. That is how the Delhi High Court in the case of Essel Shyam Communication (supra) held referring to the decision in the case of ACG Associated Capsules Pvt. Ltd. (supra). It is true that in the case of Bloom Decor Ltd., a question was suggested by the assessee which may have some bearing on the controversy on hand. However, the entire focus of the order of the Court was regarding applicability of the decision of the Supreme Court in the case of Topman Exports (supra) and not on the question of netting. In any case, therein, the decision in the case of ACG Associated Capsules Pvt. Ltd was not noticed.” 8.All these questions, as detailed above, are answered in favour of the assessee. In the present Tax Appeal, therefore, those questions deserve no entertainment. 9.Questions [6], [7], [8] & [9] in the present Tax Appeal were raised in Tax Appeal No. 811 of 2013 as Questions No. [2], [5], [7] & 12. 9.1 The Court, while answering them had noted that all these issues were covered by the decision of this Court in case of Deputy CIT v. Harjivandas Juthabhai Zaveri, 258 ITR 785. Here, learned senior advocate Shri Soparkar pointed out that the names of the litigating parties are inadvertently referred to as “Dy. CIT v. Harjivandas Juthabhai Zaveri” which is in fact is in case of the present respondent itself that the decision has been rendered. However, all the questions are covered and answered in favour of the assessee in the following manner :- “Insofar as question Nos.2, 5, 7 and 12 are concerned, it is an undisputed position that the issues are covered by a decision of this Court in the case of Dy.C.I.T. v. Harjivandas Juthabhai Zaveri, 258 ITR 785 in which the Court upheld the decision of the Tribunal granting benefit of deduction under section 80I of the Act on various incomes, such as, job work receipt, sale of empty soda ash bardan, sale of empty barrels and plastic waste. Such questions are, therefore not required to be considered.” 10.We notice that in Tax Appeal No. 368 of 2008, this Court had followed the decision rendered in 258 ITR 785 with respect to sale of scrap and the same has been dismissed. Thus, these questions also are answered in favour of the assessee and hence, they deserve no further indulgence. 10.We notice that in Tax Appeal No. 368 of 2008, this Court had followed the decision rendered in 258 ITR 785 with respect to sale of scrap and the same has been dismissed. Thus, these questions also are answered in favour of the assessee and hence, they deserve no further indulgence. 11.As far as Question [5] which concerns disallowance of interest from debtors for calculation of deduction under section 80HH & 80HHC of the Income Tax Act in the present Tax Appeal, in Tax Appeal No. 811 of 2013, such Questions are raised at serial nos. 3, 6, 9 & 15. The Court, while holding this issue in favour of the assessee, observed thus - “So far as questions Nos. 3, 6, 9 and 15 are concerned, the same are stated to be covered by the decision of this Court in the case of Nirma Industries Limited v. Deputy CIT, 283 ITR 402 (Guj) in which the Court upheld the assessee's claim for deduction under section 80I of the Act on the interest received on late payment of sale consideration as amount derived from eligible business. These questions are, therefore, not required to be considered.” 11.1 While so holding, reliance is placed on the decision in case of Nirma Industries Limited v. Deputy CIT, reported in 283 ITR 402 (Guj). This issue accordingly is answered in favour of the assessee. 12.In the present Tax Appeal, Questions [12], [13] & [14] have been raised, which in Tax Appeal No. 811 of 2013 was raised in the form of Question no. 13. 13.At this stage, it is necessary to make a mention of the submissions made by learned senior standing counsel Shri Mehta that the Question in Tax Appeal No. 811 of 2013 pertains to interest on disallowance of Soda Ash Project whereas as far as the instant case is concerned, it relates to Soda Ash Project Expenses [other than interest expenses] and therefore, reliance of the Court while deciding such an issue on the decision of CIT v. Alembic Glass Industries Limited, 103 ITR 715 (Guj) as also in case of Dy. CIT v. Core Health Care Limited, 298 ITR 194 (SC) would have no bearing. 14.Learned senior advocate Shri Soparkar has empathetically urged that both the authorities in the earlier year and in the present year had held the issue in favour of the assessee pointing out that this expenditure was in connection of expansion of the existing business. The Court on elaborate discussion had confirmed such a view of these authorities, and therefore, the interest expenses or otherwise, would get covered for the same being an expenditure in connection with expansion of the business. 15.On due consideration of rival submissions, we notice at this stage that this Court, while adjudicating the said issue, had at length discussed the same to hold that the expansion since was of an existing business, the tests applied in case of CIT v. Alembic Glass Industries Limited, 103 ITR 715 (Guj) as also in case of Dy. CIT v. Core Health Care Limited, 298 ITR 194 (SC) would have relevance and the borrowings were whether capital or revenue expenditure would be of no consequence. Profitable it would be to reproduce these observations made in this respect, which reads thus - “The sole surviving question No.13, pertains to disallowance of soda ash project interest expenses of Rs.3.33 crores (rounded off) and lab project interest of Rs.12..27 crores (rounded off). The Assessing Officer, questioned the assessee on these expenses and deleted the same on two grounds, firstly that the interest was paid by way pre-operative expenditure and secondly the assessee had capitalized such expenditure. The assessee carried the matter in appeal. CIT (Appeals) relying on a decision of this Court in the case of CIT v. Alembic Glass Industries Ltd., 103 ITR 715 (Guj) held in favour of the assessee. In addition to coming to the conclusion that there was commonality of business it was further held that the expenditure was in connection with the expansion of the existing business. On such ground, the expenditure was held allowable. The assessee carried the matter in appeal. CIT (Appeals) relying on a decision of this Court in the case of CIT v. Alembic Glass Industries Ltd., 103 ITR 715 (Guj) held in favour of the assessee. In addition to coming to the conclusion that there was commonality of business it was further held that the expenditure was in connection with the expansion of the existing business. On such ground, the expenditure was held allowable. It is this order of the CIT (Appeal) which the Tribunal upheld in the impugned judgment. Having heard the learned counsel for the parties and having perused the documents on record, we notice that CIT (Appeals) and the Tribunal concurrently came to the conclusion that there was interconnection, inter-lacing and inter-dependence of the management, financial and administrative control of various units of Nirma Limited. It was on this ground, the Tribunal held that the business in question is continuation of the existing business and not a new business. In this context, the decision relied on by the authorities below of this Court in the case of Alembic Glass Industries Ltd. (supra) laid down tests for ascertaining whether a business was part of existing business or the assessee was starting a new unit. It was held that merely because the unit was coming to a distant point by itself would not mean that it was a new business. If the facts as recorded by the CIT (Appeals) and the Tribunal can be said to have achieved finality, it would emerge that the assessee through its existing administrative mechanism started a new facility for production of soda ash and had also set up facility for production of a material called ‘lab’ for its captive consumption for the purpose of its existing manufacturing business. It is no doubt that the assessee is engaged in the business of manufacture of soap and the soda ash and ‘lab’ so produced is used by way of captive consumption. When such facts viewed in light of the findings of the CIT (Appeals) and the Tribunal, we have no reason to interfere with the ultimate conclusion. Had it been a case of entirely a new project undertaken by the assessee as canvassed by the counsel for the Revenue, a serious question of claiming pre-operative expenditure of interest by way of revenue expenditure would arise. However, when the authorities below found that it was an expansion of the existing business, applying the tests laid down by this Court in the case of Alembic Glass Industries Ltd. (supra), in view of the decision of the Supreme Court in the case of Deputy CIT v. Core Health Care Ltd, 298 ITR 194 (SC), the fact whether the borrowing is capital or revenue expenditure would be of no consequence.” 15.1 Question, as raised in the instant case, does not speak of the interest. In light of the observations made earlier, decision relied upon by this Court, this would be clearly covered and needs to be held in favour of the assessee. 16.Resultantly, Tax Appeal is dismissed. {Harsha Devani, J.} Prakash* {Ms. Sonia Gokani, J.}