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TMI Blog2014 (10) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... set – relying upon Commissioner of IncomeTax v. Rajaram Bandekar [1993 (1) TMI 46 - BOMBAY High Court] – the explanation was added with an object of removing doubts with regard to the includibility of interest relatable to any period after the asset has first been put to use, in the computation of its actual cost - CIT (A) as well as the Tribunal have noticed that in view of introduction of Explanation 8 to Section 43 (1) of the Act which was held retrospective in nature, the interest cannot be capitalized which was paid after the slump sale was effected and the factory was in operation, and therefore, expenses were revenue in nature - The directions given to the AO to allow the amount of interest of ₹ 1.57 Crores is upheld – Decided against revenue. - Tax Appeal No. 1071 of 2014 - - - Dated:- 23-9-2014 - Harsha Devani And Sonia Gokani,JJ. For the Petitioner : Mr. Nitin K. Mehta For the Respondent : None ORDER ( Per : Honourable Ms. Justice Sonia Gokani ) Challenging the order of the Income Tax Appellate Tribunal, Ahmedabad { Tribunal for short} dated 28th August 2013, the present appeal is preferred by the Revenue under section 260A of the Incomet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attributed a sum of ₹ 89.34 Crores [rounded off] to the various depreciable assets and claimed depreciation accordingly. 4. For the assessment year in question ie., A.Y 1997-98, in the return of income, the respondent had claimed depreciation. However, the Assessing Officer noted that there was no amount mentioned in the agreement against each of the above items, and therefore, it was not possible to ascertain the value of the items. The Assessing Officer, on detailed discussion, was of the opinion that the plant and machinery installed could not be included in the actual cost and adopted the actual cost of the various assets as per the written down value shown in the books of account of the CTC Limited and against the depreciation claimed of ₹ 10.78 Crores [rounded off], an amount of ₹ 9.82 Crores [rounded off] had been disallowed. 5. Aggrieved assessee challenged the same before the CIT [A] which was of the opinion that the action of the Assessing Officer in invoking Explanation 3 to subsection (1) of Section 43 was not justified in as much as the plant and machinery; land and building forming part of the EMD undertaking had been valued by the approved va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r allocation given in the deed. 8. In the instant case, we notice that the issue with regard to the slump sale and the consideration as a result of the sale for a lumpsum consideration of ₹ 100 crores has not been a matter of dispute. However, against individual asset sale, since there was no bifurcation of the consideration, the Assessing Officer had questioned and doubted the claim made by the assessee for the purpose of depreciation. The Assessing Officer also had made verification from the incometax records of the transferor company and it was noticed that there also there is no bifurcation made of the consideration of ₹ 100 crores against the individual assets sold by it. This being essentially the question of fact both the CIT [A] and the Tribunal have extensively dealt with the entire factual matrix and have also applied the relevant provisions of law to these facts to conclude that the assessee arrived at a price of ₹ 100 Crores on slump sale basis for transfer of a running business of EMD undertaking, and therefore, factum of respondentassessee not having paid consideration for acquiring individual assets cannot be construed as illusory or colorable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hereinabove, we see no mistake in CIT [A] as well as Tribunal in concluding that Explanation 3 to Section 43 of the Act was not required to be invoked. The first issue need no consideration therefore as no substantial question of law has arisen. 12. The second issue concerns disallowance of ₹ 1.57 Crores [rounded off] on account of interest expenditure on unpaid purchase consideration. The Assessing Officer found that the amount of interest claimed by the assessee concern the delay in payment of sale consideration to CCTC and therefore, he concluded that the interest was a part of total consideration paid by the respondentassessee for acquiring the EMD undertaking. Therefore, such interest amount was to be treated not as a revenue expenditure relatable to the cost of acquisition. 13. The assessee had challenged such issue before the CIT [A] and the CIT {A}, after considering Explanation 8 to Section 43 of the Act and applying the same to the facts of the case concluded in favour of the assessee and against the Revenue. It can be noticed that a detailed working is made by the CIT [A] while concluding such an issue. 14. Revenue when challenged the issue before the T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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