The Commissioner Of Income Tax – 2, Mumbai v. Tata Ssl Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.493 OF 2011 The Commissioner of Income Tax – 2, Mumbai..Appellant. Versus Tata SSL Limited ..Respondent. Mr.Vimal Gupta, Senior Advocate with Ms.Padma Divakar for the appellant.Mr.Ajit Shah i/by Mr.Srihari M Iyer for the respondent. P.C. : CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 5[th] November 2012 1.Two questions of law raised by the Revenue in this appeal reads thus : a)Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the disallowance of Rs.7,15,65,154/- made by the Assessing Officer being interest paid on loans raised specifically to set up a new unit at Sisodra and for modernization of the wire rod mill plant even though the provisions of Explanation 8 to Section 43 (1) state that such expenditure will constitute part of the actual cost of the assets and also the fact that the Assessee Company had itself capitalized the said expenditure in its Books of Account ?the Tribunal was justified in deleting the disallowance of Rs.7,15,65,154/- made by the Assessing Officer being interest paid on loans raised specifically to set up a new unit at Sisodra and for modernization of the wire rod mill plant even though the provisions of Explanation 8 to Section 43 (1) state that such expenditure will constitute part of the actual cost of the assets and also the fact that the Assessee Company had itself capitalized the said expenditure in its Books of Account ? b)Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in allowing depreciation of Rs.19,70,444/- on assets of the hot rolling mill even though the rolling mill had ceased the Tribunal was justified in allowing depreciation of Rs.19,70,444/- on assets of the hot rolling mill even though the rolling mill had ceased to be functional and the assets were not used for the business purposes of the Assessee Company during the relevant period ? 2.The assessment year involved herein is AY 1997-1998. 3.As regards first question is concerned, counsel for the parties state that similar question raised by the Revenue in the assessee's own case for assessment year 1996-1997, being Income Tax Appeal No.491 of 2011 decided today i.e. 5[th] November 2011, has not been entertained by this Court. Hence, for the reasons stated therein, the first question cannot be entertained. 4.As regards second question is concerned, relevant facts are that the assessee was having a hot rolling mill at Sisodra. In March 1996, the assessee stopped operations in the rolling mill at Sisodra since there was non-availability of raw material for running the hot rolling mill. The assessee, however, claimed depreciation on the aforesaid plant and machinery. According to the assessee, it had not closed down the hot rolling mill during the assessment year in question, but had only temporarily suspended operations owing to non-availability of raw material. It was contended that due to non-availability of raw material, it had to change from hot rolling mill to cold rolling mill and that was the reason for not using the machinery during the relevant period. 5.The Income Tax Appellate Tribunal in para-40 of its order has recorded a finding that there was neither discontinuance nor intention to discontinue the hot rolling mill during the previous year relevant to the present assessment year. In these circumstances, allowing depreciation in the assessment year in question cannot be faulted. Accordingly, the second question cannot be entertained. 6.The appeal is accordingly dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)