9911796707
TMI Blog2004 (10) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Tribunal in the case of appellant itself for earlier years. No error has been pointed out therein. Accordingly, no interference is considered necessary. 3. In ground No. 2 the dispute relates to the amount of Rs. 13,16,39,997 which the Assessing Officer has treated as capital expenditure, but the same was directed to be allowed as revenue expenditure by the ld. CIT(A). 4. The respondent assessee before us has contended that in the appellant's own case in ITA No. 1584/JP/93 for assessment year 1992-93 dated 16-6-2000, in which one of us, the ld. Judicial Member was also a party, the issue of claim of deduction of interest has been held to be covered by the decision of the Tribunal in the case of Tata Chemicals Ltd. v. Dy. CIT [2000] 72 ITD 1 and accordingly the order of the ld. CIT(A) has been upheld. It was, therefore, prayed that the ITAT may follow its own order for assessment year 1992-93 and uphold the order of ld. CIT(A) for this year also. We, therefore, asked the ld. Authorised Representative to take us to the findings of the Tribunal in the said decision and show if the Tribunal has considered the material aspect of the issue as to whether the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nizers for both the units are the same. There is complete interconnection, inter-lacing and inter-dependence between the two units. Facts of both the years are same and the Tribunal has already allowed the deduction in assessee's own case for the earlier year. Reliance has been placed on the following decisions:- India Cements Ltd. v. CIT [1966] 60 ITR 52 (SC). CIT v. Kedarnath Jute Mfg. Co. Ltd. [1971] 82 ITR 363 (SC). Tata Chemicals Ltd.'s case. It was, therefore, urged that the appeal of the revenue needs to be dismissed. 7. The hearing in this case was completed on 30-11-2000 and the parties were directed to furnish synopsis of their arguments. From the submissions made, it was found that both the parties have furnished further information on which certain clarifications were required. The case was accordingly re-fixed for hearing and parties were directed to furnish the material placed before the ld. CIT(A) in deciding the assessee's appeal No. ITA 185/93-94 for assessment year 1992-93 and any further material for substantiating their claims. The ld. Departmental Representative has furnished a written note dated 12-12-2000, which reads as under: "During the course of hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to acquisition, erection and installation of plant and machinery for new unit which is evident from the details of interest submitted by the Assessing Officer, copy of which is also enclosed. Regarding the deduction under sections 80HH & 80-I it can be submitted that in these years the assessee was in heavy losses therefore no such claim was made. However, from the copy of computation of income for assessment year 1995-96, attached to this letter, it is evident that the assessee has claimed deduction under section 80-IA right from assessment years 1995-96 to 1999-2000. All these facts were not considered by the Hon'ble ITAT while deciding the appeal for assessment year 1992-93 because these facts might have not been brought to the notice of the Hon'ble Bench at that time. In this connection, ratio of decision of Apex Court report at 155 ITR 120, 124 is applicable. In view of aforesaid discussion the assessee's claim regarding interest and depreciation deserves to be rejected and the Assessing Officer's order may kindly be restored." A further note dated 9-1-2001 has also been placed by the ld. Departmental Representative as under: "Kindly refer to my earlier submission dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting unit. Thus the existence of a new unit or separate identity of the units for the purpose of sales tax, excise duty would not make the assessee dis-entitle to claim interest on borrowed capital. Enough light has been thrown on the concept of same business for the purpose of section 36(1)(iii) in case of M/s. Tata Chemicals Limited reported at 72 ITD 1 (Mum.). In this case a number of judicial pronouncements were considered and the fertilizer unit at Babrala (UP) and the chemical manufacturing unit at Mithapur (Gujarat) as well as detergent business at Pitampur (MP) were all considered to be constituted one composite or single business. In the result interest in respect of the new unit was considered as allowable under section 36(1)(iii). For arriving at this conclusion the place of the units was considered to be irrelevant and concept of same business was decided on the basis of unity of control indicated by interlacing, interdependence on account of existence of common management, administration, etc. Need not to emphasize that in the aforesaid case decided by Mumbai Bench also the identity of the units, their sales tax registration numbers, excise registration numbers were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decisions considered by Mumbai Bench and Jaipur Bench are relevant for deciding the issue specially the decision of Hon'ble Supreme Court reported at 220 ITR 185 and Rajasthan High Court reported at 169 ITR 499 should be considered. The written submission of learned DR is silent upon relevant facts for deciding the issue i.e. unity of control, interlacing, interconnection etc. on the basis of which the matter was decided earlier and is being: requested to be decided now also. Therefore Hon'ble ITAT is requested to uphold the order of CIT(A) and follow its own order for assessment year 1992-93." 9. Shri Sanjay Jhanwar present on the last date of hearing on 14-2-2001 has admitted that the ld. Departmental Representative has placed the copy of whole of the material filed before the ld. CIT(A) in assessee's appeal for assessment year 1992-93 and that there is no other material available with him for deciding the issue. Accordingly the appeal was treated as heard. 10. Rival submissions have been heard in the light of material placed on record and case laws referred by both the parties. The Tribunal in ITA No. 1584/JP/93 in respondent's case for assessment year 1992-93 decided the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on accounts for the year ended 31st March, 1993 as per Schedule 17 to the Balance Sheet, which forms an integral part thereof. Under the head "Notes on accounts" at sl. No. 9, the assessee also disclosed that additions to capital work in progress includes the following: ------------------------------------------------------------------------ Upto For the year Total upto 31st March, ended on 31st 31st March, 1992 March, 1993 1993 Rs. Rs. Rs. ------------------------------------------------------------------------ Salaries, Wages and Allowances 8,10,744 25,36,812 33,47,556 Contribution to PF & Other Funds 1,01,614 2,06,222 3,07,836 Workmen & Staff welfare 39,293 2,01,520 2,40,813 Travelling expenses 11,34,747 11,82,471 23,17,218 Consultancy, professional and legal charges 6,60,503 76,05,930 82,66,433 Share issue expenses 49,21,635 49,21,635 Power, Fuel and Electricity charges 2,21,295 23,74,865 25,96,160 Raw Material Consumed - 2,19,461 2,19,461 Stores & Spares consumed 22,98,803 72,63,879 95,62,682 Other manufacturing expenses - 20,475 20,475 Insurance 24,11,992 41,90,151 66,02,143 Rent 60,000 60,000 1,20,000 Rates & Taxes 3,339 1,53,592 1,56,931 Research ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt was borrowed for the purpose of existing business nor for the expansion of the existing business or even for acquiring fixed assets in the existing business. 12.1 From the copy of Registration Certificate issued by the Superintendent, Central Excise Rural-II, Kota on 5-3-1993, it is found that the registration has been made in the name of M/s. Neer Shree Cement under Registration No. AABCM/6602 QXM002/1/RII/CH-25/93 whereas the assessee was holding a separate registration in the name of M/s. Mangalam Cement Ltd. which was its existing business under Registration No. AABCM/6602 QXM001/2/CW-25/JPR/92 with the same authority. It is thus by obtaining a separate registration the assessee has made investment in the new business so as to conveniently and independently carry on the activity of manufacturing of cement without affecting the conduct of other business in the name of M/s. Mangalam Cement Ltd. Even the fixed assets and others have been transferred at cost, as is borne out from the facts disclosed by the respondent assessee in its "Significant Accounting Policy" in the Schedule 17 forming part of the Balance Sheet. The assessee thus did not consider such transfers as part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got conducted for its new unit by paying Rs. 25,000 (Twenty five thousand only) separately from the payment of Rs. 50,000 (Fifty thousand only) for the audit of accounts of its existing business. This factor alone, goes to show that the assessee has maintained separate books of account for both the businesses and has not produced any audited accounts for the new unit/business nor did it produce the books of account to establish the control of account at one place. We, therefore, hold that there is no control of accounts at one place and the details of Capital Work-in-Progress have been furnished in the accounts. For the purpose of information only and thus accounts of both the business units are separate and independent of each other. Besides this, we also find that the amount of expenditure incurred on payment of salaries, wages and allowances is Rs. 25,36,812 and contributions to P.F. and other funds is Rs. 2,06,222 apart from expenditure on workmen & staff welfare at Rs. 2,01,520. None of these expenditure has been charged to the profit and loss account prepared for the existing business nor claimed as expenses of the assessee in the return of income filed by it. By debiting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and details with respect to the management etc. for substantiating its claim nor such details were available with the ld. CIT(A) while deciding the issue in favour of the assessee for assessment year 1992-93. The contention of the assessee that setting up of a- new cement manufacturing unit at the same place does not appear to be correct in the light of the fact that it has itself taken a separate registration under Central Excise Act, which under the law can be granted for business at a separate place but not for the business at the same place. Similarly, the assessee's submission that the production of both the units is to be considered as production of the assessee company appears to be a gossip in view of the specific information appended to the notes given in schedule 17 forming part of the balance sheet wherein it has by way of information categorically mentioned that the quantities of capacity and the production are excluding of the capacity and production of new cement manufacturing unit. In the absence of availability of material details like, the director's report, auditors report, audited accounts with complete schedules, sanction letter of the loans, securities given, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test in view of the fact that same cannot be characterised as a composite business. It is thus in the absence of any material having been brought on record by the assessee, the Tribunal while deciding the issue in the case of the assessee for assessment year 1992-93 did not even confirm the findings of the ld. CIT(A). It, however, appears to have allowed the appeal per incuriam as the assessee had not placed the relevant facts and material and had not made out a case of dovetailing of the business before the Tribunal. Before us also no such material has been placed by the assessee. Accordingly we are not inclined to expand the scope of the decision taken by the Tribunal in the assessee's own case for assessment year 1992-93 as that would amount to unnecessarily expanding the scope of authority, where even no principle was evolved. Such a view is fortified by the decision of Apex Court in the case of Prakash Amichand Shah v. State of Gujarat AIR 1986 SC 468, para 26 and also in Krishna Kumar v. Union of India [1990] 4 SCC 207 (paras 19, 20) CB. We also are equally concerned on the statements of matter other than laws, for example, facts, which have no binding force as has been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(1)(iii) amounting to Rs. 13,16,39,997. I would appraise the relevant facts for proper appreciation of the issue involved. 2. Briefly stated, the assessee-company is primarily engaged in the manufacturing and sale of Portland cement at Morak, District Kota (Rajasthan) and is in existence since 1981. It has set up a new factory at Aditya Nagar, Morak, District Kota having capacity of 6 lakhs tons per annum. The assessee has claimed deduction of interest under section 36(1)(iii) Rs. 13,16,39,997 on the capital borrowed. It was found by the Assessing Officer that the assessee-company itself treated the interest as capital expenditure in the books of account and only in the computation of income, it was claimed to be revenue expenditure. The Assessing Officer was of the view that as per prevalent accounting practice, the interest would form part of the fixed assets, on which depreciation is allowable. He, therefore, in view of it and keeping in view of the findings given in the assessment order for the assessment year 1992-93, rejected the assessee's claim. 3. The CIT(A), following the earlier order and keeping in view of the findings given therein on a similar issue, allowed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has already allowed the deduction in the assessee's own case for the earlier year and hence the deduction of interest amounting to Rs. 13,16,39,997 under section 36(1)(iii) is allowable in this year also. Reliance has been placed on the following decisions:- India Cements Ltd. Kedarnath Jute Mfg. Co. Ltd. Tata Chemicals Ltd. It was, therefore, submitted that the appeal of the revenue should be dismissed. 7. The ld. D/R has further furnished written notes dated 12-12-2000 and 9-1-2001, which have been reproduced by the learned Accountant Member in his order at Page Nos. 4, 5 & 6, therefore, to avoid repetition, the same are not being reproduced here. 8. The ld. A.R. has also given counter reply to the written submission of the revenue dated 12-12-2000, which has also been reproduced by the learned Accountant Member in his order at Page Nos. 6 & 7, therefore, to avoid repeatation, the same is also not being reproduced here. 9. The ld. A/R, on the last date of hearing, repeated the same arguments and further submits that no contrary material has been brought on record by the revenue on the issue of unity of control, inter-connection, interlacing and inter-dependen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. As was pointed out by Lord Russell in the case of B.S. Footwear Ltd. [1970] 77 ITR 857, 860 (CA), the Income-tax law does not march step by step in the footprints of the accounting profession." 11. In view of the above, I am of the view that the entries made in the books of account cannot be the sole criteria for disallowing the deduction of interest Rs. 13,16,39,997, claimed by the assessee under section 36(1)(iii) of the Act, which is otherwise allowable. 12. From the assessment order, I find that the claim of the interest under section 36(1)(iii) amounting to Rs. 13,16,39,997 was also denied in view of the disallowance of such claim made in the assessment year 1992-93. I find that the legal position of the allowability of the claim of interest has been dealt with in detail by the ITAT, Bombay Bench in the case of Tata Chemicals Ltd. at page 30, which is reproduced as under:- "32. In CIT v. Tarai Development Corpn. Ltd. [1994] 205 ITR 421/72 Taxman 153 (All.) it was held that interest paid on capital borrowed for the expansion of the existing business is allowable under section 36(1)(iii). In CIT v. Expanded Metal Mfrs. [1991] 189 ITR 317/55 Taxman 429 (AIL), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e name of the assessee, existing funds were also utilised for the new unit; expenditure incurred were reflected in the profit and loss account and balance sheet of the assessee-company. According to the Tribunal, the above facts showed that the business were one and the same. The High Court upheld the finding of the Tribunal." 13. Since the Tribunal, in the assessee's own case for the assessment year 1992-93, has allowed the assessee's claim of interest, therefore, keeping in view of the consistency and the decision of this Tribunal in the case of Hindustan Zinc Ltd. v. Dy. CIT [2000] 66 TTJ (Jp.) 3, and also the decisions of other Benches of the Tribunal in Philips India Ltd. v. ITO [1966] 59 ITD 390 (Bom.), Bharat Forge Ltd. v. Dy. CIT [1995] 53 ITD 575 (Pune), I am of the view that the assessee's claim of interest is allowable and, accordingly, the order passed by the CIT(A) on this account deleting the disallowance of interest is upheld. 14. It is also seen that at the time of hearing, the Bench has required certain information on the issue of unity of control, inter-connection, inter-lacing and inter-dependence between the two units but in the absence of any such finding in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in view of the undisputed findings recorded in the order of the Accountant Member to the effect that there was no unity of control, interlacing, interconnection and interdependence between the two units and the assessee has not made out a case of dovetailing of the business, could it be said that the assessee's case is covered by the decision of Tribunal in the case of Tata Chemicals Ltd. v. DCIT 72 ITD 1 (Mum.) so as to follow the order of the Tribunal in assessee's own case for assessment year 1992-93 for allowing the claim of interest of Rs. 13,16,39,997. (iii) Whether the Tribunal has power to decide the controversy before it by recording its own findings even though such findings were not specifically recorded by the Assessing Officer in his order for reaching the same conclusion for disallowance of claim of interest of Rs. 13,16,39,997. (iv) Keeping in view the entirety of facts and circumstances and various observations and findings that the expenditure of Rs. 13,16,39,997 has been incurred by the assessee for the purpose of investment in the new business and not in the existing business nor for the expansion of the existing business and unity of control is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se for assessment year 1992-93 for allowing the claim of interest of Rs. 13,16,39,997. (iii) Whether the Tribunal has power to decide the controversy before it by recording its own findings even though such findings were not specifically recorded by the Assessing Officer in his order for reaching the same conclusion for disallowance of claim of interest of Rs. 13,16,39,997. (iv) Keeping in view the entirety of facts and circumstances and various observations and findings that the expenditure of Rs. 13,16,39,997 has been incurred by the assessee for the purpose of investment in new business and not in the existing business nor for the expansion of the existing business and unity of control is also not indicated by inter lacing, inter dependence and interconnection between the business and dovetailing of one into another and as such the assessee was not entitled for deduction under section 36(1)(iii) is a correct view of the Accountant Member or that the view taken by the Judicial Member that the assessee's claim of interest is allowable is a correct view." 3. I have gone through the relevant material. It is regrettable that the Hon'ble Members do not know what is the difference b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned above disallowance in appeal and the learned CIT (Appeals) vide order dated 22-2-1994 allowed the interest with the following observations: "5.1 The grievance of the appellant is practically the same as referred to in the appellate order mentioned above and keeping in view the finding given therein on a similar issue, the claim of the appellant appears to be well in order and is directed to be allowed. (Relief Rs. 13,16,39,997)." 7. The revenue being aggrieved carried the matter- in appeal before the Appellate Tribunal. After the oral hearing was completed on 30-11-2000, the Tribunal directed the parties to furnish synopsis of their arguments. Learned Departmental Representative vide his written submissions dated 12-12-2000 and 9-1-2001 submitted that earlier order of the Tribunal for assessment year 1992-93 be not applied in the assessment year under consideration on account of the following reasons: (a) The new unit was different as there was distance of 25 yards between the two factories. The two units had different names as follows: (i) Manglam Cement Ltd. (old unit) (ii) Neer Sharee Cement (new unit). (b) These units have separate excise numbers. (c) There wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided cases by Mumbai Bench, identity of units, their sales-tax registration number, excise registration number were different and distinct since the units were located in different States. The assessee further relied upon the decision of Jaipur Bench in the case of Hindustan Zinc Ltd. wherein on similar circumstances new unit was considered as expansion of existing business and deduction under section 36(1)(iii) was allowed to the assessee. The assessee company did not claim deduction under section 80-I in any of the years neither the deduction was allowed to it, but even if such a claim was made, it would not make any difference for permitting deduction under section 36(1)(iii) of the Income-tax Act. The assessee accordingly submitted that order for assessment year 1992-93 be applied in the year under consideration. 9. The learned Accountant Member after considering facts and circumstances of the case held that the assessee failed to bring complete and correct facts before the Tribunal nor did it file adequate and relevant material and that is how the Tribunal appears to have recorded no finding on the facts as to whether both the businesses of the assessee were one and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation given by the assessee that the new unit had additional capacity of 6 lakhs tons per annum in addition to capacity of 4 lakhs M.T. of M/s. Mangalam Cement Ltd. The Accountant Member further found that production of Managalam Cement Ltd. did not include Clinker production of 586 M.T. of new unit. From the above evidence the learned Accountant Member concluded that the assessee himself did not consider Neer Shree Cement as part of existing business in the name of M/s. Mangalam Cement. The learned Accountant Member also found that no part of expenditure incurred in the new business was charged to Profit and Loss of the existing business. He further found fault that the assessee did not furnish complete balance sheet with all the Schedules. The report of the Directors as also report of the Auditors for either of the businesses was not produced although Rs. 25,000 and Rs. 50,000 were paid to the Auditors for getting accounts of the business audited. From the above, the learned Accountant Member concluded that the assessee maintained separate books of account for both the businesses and had not produced any audited account for new unit/business to establish control of account at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried by the assessee in the same name and style and unity of control was established beyond any doubt. But in the present case the assessee has failed to produce any such material from which an inference can be drawn that unity of control, interlacing, interconnection or interdependence etc. was with the respondent assessee for both the businesses. The burden that lay on the assessee was not discharged. The learned Accountant Member also observed that Tribunal while deciding the issue in the case of the assessee for the assessment year 1992-93 did not even confirm the findings of the CIT (Appeals). It allowed the appeal per incuriam. In the light of above observation, the learned Accountant Member held that expenditure of Rs. 13,16,39,997 was incurred by the assessee for purposes of investment in new business and, therefore, assessee was not entitled to deduction under section 36(1)(iii). The learned Accountant Member, further observed as under: "He (Assessing Officer) shall however, examine the facts for allowing depreciation on this amount and give opportunity to the assessee before allowing any depreciation claim, if any, found to have been made before him. Besides this he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 13,16,39,997 was denied as similar claim was denied in assessment year 1992-93. The learned Judicial Member then considered and reproduced following observation of Bombay Bench in the case of Tata Chemicals Ltd.: "32. In CIT v. Tarai Development Corpn. Ltd. [1994] 205 ITR 421/72 Taxman 153 (All.) it was held that interest paid on capital borrowed for the expansion of the existing business is allowable under section 36(1)(iii). In CIT v. Expanded Metal Mfrs. [1991] 189 ITR 317/55 Taxman 429 (All.), the assessee was engaged in the business of expansion of iron metal. It started a new unit for the manufacture of rubber products. It raised a loan for the purpose. The rubber factory did not commence production in the previous year. It was held on these facts that the assessee is one and the same and though it had set up a new factory, the assessment was not made unit wise but assessee-wise. There is no rule which compels the assessee under such circumstances to capitalize the interest or to include it in the capital expenditure (relating to the new unit). In Kanhiram Ramgopal v. CIT [1988] 170 ITR 41/36 Taxman 305 (MP), the assessee was carrying on a rice and dhall mill and borrow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his proposed order, the deletion of disallowance of interest was required to be upheld. The learned Judicial Member accordingly directed that deduction of interest claimed by the assessee be allowed. He dismissed the appeal of the revenue. 13. On account of above difference, the matter has been placed before me under section 255(4) of the Income-tax Act. 14. I have heard both the parties. There is no dispute that facts and circumstances in the assessment year under consideration are identical with facts in the assessment year 1992-93 where the matter was decided in favour of the assessee. Although relevant portion of order of Income-tax Appellate Tribunal for above year has been reproduced by the respective members in their orders, yet in order to resolve the controversy it is desirable to reproduce that order here. The Tribunal in the order dated 16-6-2000 for assessment year 1992-93 held as under: "8. We have heard the rival submissions of the parties and after examining the facts of the case, we are of the considered opinion that the assessee's case is covered by the recent decision of the Tribunal in case of Tata Chemicals Ltd. v. DCIT, we therefore, hold that the disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of the assessee were identical and decision in the case of Tata Chemicals Ltd. was applicable. In the assessment order for 1993-94, the Assessing Officer-accepted that facts and circumstances were same and, therefore, his decision for 1992-93 was applicable. There is no submission nor there is any finding recorded by anybody that facts in the case under appeal are different from the facts involved in the case of the assessee for the assessment year 1992-93. In the above circumstances, in my humble opinion, the Tribunal was bound to follow with respect the decision given by the Income-tax Appellate Tribunal for the assessment year 1992-93. The principle of consistency is applicable to income-tax proceedings. Even otherwise a decision of a coordinate Bench of same strength is required to be accepted by Bench of same strength. 17. The above principle is well established yet for the guidance of those who entertain any doubt about it and feel pride in not following judicial precedents, distinguishing cases where no distinction exists, I may reproduce the following observations of Hon'ble Supreme Court in the two cases: (1) Sundarjas Kanyalal Bhatija v. Collector, Thane [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been slow in not following decision of Tribunal in this case for the assessment year 1992-93. The learned Member did not only commit judicial impropriety by not following the decision but went a step further in asking the Departmental Representative to find out as to what was the material before the Bench deciding case of assessee for assessment year 1992-93. It specifically asked the parties to produce material which they had produced in proceedings for assessment year 1992-93. The Hon'ble Member further went on to record that the assessee had not brought the complete and correct facts before the Tribunal (in 1992-93) nor did it file adequate and relevant material and that is how the Tribunal appears to have recorded no finding of facts as to whether both the businesses of the assessee were one and the same or that the "interest was paid on the amounts borrowed for making investment or acquiring assets in the existing business". There is need to exercise judicial restraint and, therefore, nothing further need be said except observing that a coordinating Bench is not entitled to assume role of an appellate authority sitting over the decision for the assessment year 1992-93. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the company and not on the unit and it is impossible to hold that because of excise number new unit can be treated as a new business. Then there is controversy about the name of the new unit as "Neer Shree". This does not make it a new business when it is also to manufacture cement to be sold under the trade name "Birla Uttam". No other significant facts have been brought on record to hold that new plant is a new business. Other circumstances mentioned are only adverse inferences drawn which on facts and circumstances of the case are not justified as is demonstrated from the following chart made available by the assessee: ------------------------------------------------------------------------- S.No. Observation of Ld. A/M Submissions/explanations ------------------------------------------------------------------------- 1. ITAT in assessment year ITAT in assessment year 1992-93 1992-93 did not record at para 5 recorded the fact any finding on fact as that CIT(A) allowed the claim to whether both businesses as loan was availed of assessee were the same for expansion/extension or interest paid on borrowing of existing business, is for making investment product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider This has no relevance as till such transfer as part of the plant is Capitalized same block. in books, it is shown in fixed assets schedule as capital work in progress of the company. 9. Installed capacity /actual In note No. 13 of schedule 17 production of Neer Shree which provides statistical Cement not considered information, licence capacity in installed capacity/actual is mentioned at 10 lakhs MT production of Mangalam which includes that of the new Cement Ltd. unit but in installed capacity and actual production, new unit's Information is given in bracket since plant was under trial run and not started commercial production. 10. Expenditure on workman, Expenses on workmen, raw raw material & administration material and administration of new business not reflected which directly relate as expenses of existing to installation of new plant business. has been Transferred/allocated to capital work in progress in accordance with accounting policy followed for accounting of expenditure during construction period. 11. Complete B/Sheet with Complete balance sheet with schedule to accounts not schedule to accounts filed fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany in name of Mangalam Cement Ltd. 16. By charging financial This has no relevance to expenses to CWIP and not the issue under consideration. to P & L account, flow of It is a settled law that making funds cannot be said to be of entries in the books is not common. decisive for allowability of claim under Income-tax Act. 17. All above details/information All above details were before not placed before CIT(A) AO as well as CIT(A) in in A.Y. 1992-93. assessment year 1992-93. 18. In Tata Chemicals on fact Tata Chemicals case is fully it was held that all applicable as explained in activities carried point No. 4 below. at different places were carried in same name & style, there is unity of control, existence of common funds, administration and linking of accounts through Head Office. 19. Even if items manufactured The test of composite business in both units is same it as held in Tata Chemicals's is not appropriate test case is fulfilled by assessee to hold it as composite as explained in point No. 4 business. below. 20. ITAT in AY 1992-93 did not ITAT after examining the facts confirm finding of CIT(A) of the case dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness. The commercial production did not start in the period under consideration, although trial production had started. The assessee never claimed any depreciation presumably on the ground that machinery was not put to commercial use. There are certain decisions holding that even when machinery is used for trial production, the assessee is entitled to depreciation and other expenses. But contrary view is also available. This controversy was not raised and was not necessary to be considered and decided. With the above observation, I agree with the view expressed by the learned Judicial Member and hold that interest was rightly claimed as a deduction. The order of CIT (Appeals) on this ground was liable to be confirmed. 20. With the above observations, the matter is sent back to the Bench for decision according to majority opinion. Per Dr. Satish Chandra, Judicial Member.- There was a difference of opinion between the members of the Bench and the following question as summarized by Hon'ble President was referred to the Third Member for his opinion: "Whether, on the facts and in the circumstances of the case, learned CIT (Appeals) was justified in allowing interest of Rs. 13,16, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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