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TMI Blog2010 (3) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in directing the Assessing Officer to delete the interest charged under sections 234B and 234C of the Income tax Act, 1961. 4. On the facts and in the circumstances of the case, the Ld. Commissioner of Income tax (A)-XI, Ahmedabad ought to have upheld the order of the Assessing Officer to the above extent. 5. It is therefore prayed that the order of the Ld. Commissioner of Income tax (A)-XI, Ahmedabad may be set aside and that of the Assessing Officer be restored. 2. At the outset, Ms.Urvashi Shodhan, appeared on behalf of assessee produced a copy of the decision of the ITAT Bench B in assessee s appeals ITA Nos.404, 1648, 2654/Ahd/2002 and No.3726/Ahd/2003 and Department s appeals - ITA Nos.440, 2252, 2751/Ahd/2002 and No.3722/Ahd/2003 and submitted that in the assessment year under appeal, the Assessing Officer disallowed ₹ 2,19,92,647/- on account of pre-operative interest, treated as capital expenditure. In assessee s own case, the Learned CIT(Appeals) in the Assessment Years 2000-01, 2001- 02 2002-03 deleted the said disallowance following the decision of Hon'ble Gujarat High Court in the case of CIT vs. Core Health Care Limited 251 ITR 61 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for extension of existing business or profession (whether capitalized in the books of account or not) is allowable u/s.36(1)(iii) as Revenue expenditure upto the Assessment Year 2003-04. This has been upheld by the Hon'ble Supreme Court in the case of Dy.CIT vs. Core Health Care Limited 167 Taxman 206 (SC) It is only by the Finance Act, 2003, w.e.f. 01/04/2004, following the proviso to section 36(1)(iii) of the I.T. Act, 1961, which reads as under:- Provided that any amount of interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. 5.1. Admittedly, assessment year involved in the present appeal is Assessment Year 2003-04. Therefore, proviso to section 36(1)(iii) which is inserted by the Finance Act 2003, w.e.f. 01/04/2004 is not applicable. In view of this, we following the decision of the Tribunal in assessee s own case in the earlier assessment years(supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessee s own case(supra), incline to uphold the order of the Learned CIT(Appeals) and direct the Assessing Officer not to include the preoperative interest expenses and prior period expenses while computing book profit u/s.115JB of the I.T. Act, 1961. Thus, this ground of appeal of Revenue is rejected. 8. With regard to ground No.3, the Learned Departmental Representative pointed out that in the impugned order, the Learned CIT(Appeals) erred in directing the Assessing Officer to delete the interest charged u/s.234B 234C of the I.T. Act, 1961. 9. On the other hand, the ld. counsel for the assessee pointed out that no such direction has been given by the Learned CIT(Appeals) in the impugned order. Therefore, the view taken by the Learned CIT(Appeals) be upheld. 10. Having heard both the parties, we have carefully gone through the orders of the lower authorities. In order to understand what direction with regard to levy of interest charged u/s.234B 234C of the I.T. Act, 1961 is given by the Learned CIT(Appeals) in the impugned order, one has to go through the entire order particularly paragraph Nos.8.1 8.1.2 which reads as under:- 8.1. In this context the dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate orders of my predecessor in the appellant s own case for A.Ys.1998-99 to 2000-01 and 2001-02 and allow credit of pre-paid taxes as per the provisions of Income-tax Act. 11. From the perusal of the aforesaid two paragraphs, it can be seen that the Learned CIT(Appeals) in paragraph No.8.1 of the impugned order reproduced the decision of his predecessor for the Assessment Year 1998-99, wherein Assessing Officer was directed to delete the interest charged u/s.234B 234C of the I.T. Act, 1961, if the assessee is not liable for taxation under normal taxation, after giving effect of this order. In the assessment year under appeal, the assessee-company is assessed to tax at book profit of ₹ 33,67,424/- u/s.115JB of the I.T. Act, 1961. We accordingly held that for the assessment year under appeal, the levy of interest u/s.115JB of the I.T. Act, 1961 is mandatory as held by the Hon'ble ITAT Bench B (Third Member) in assessee s own case for Assessment Year 1997-98, 1998-99, 1999-2000 2000-01 (in ITA Nos.404, 1648, 2654/Ahd/2002 and ITA No.3726/ahd/2003 respectively). The relevant paragraph of the said order u/s.255(4) of the IT Act, 1961, reads as under:- 2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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