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TMI Blog2016 (5) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.3.2005 was ₹ 364.44 lacs which comprised of ₹ 331.68 lacs as the opening balance in the account and ₹ 32.76 lacs was added during the year. There was no loan which was outstanding as on 31.3.2004 and 31.3.2005 and none of the interest bearing funds were utilized for the investment in the said opening work in progress. Similar issue of disallowance of interest on account of investment in the capital work in progress had come before the Tribunal in assessee's own case relating to assessment year 2004-05 and the Tribunal upholding the order of CIT (A) held that no interest bearing capital was invested in the aforesaid capital work in progress, which is opening balance for the year under consideration. In view thereof, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, the Hon'ble ITAT is right in upholding the order of CIT(A) dated 18.05.2010, thereby deleting the addition of ₹ 56,48,840/- made by the Assessing Officer on account of disallowance of interest relatable to investment in capital-work-in-progress? 3. A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee derives income from manufacturing of Hosiery garments and filed its return of income on 31.10.2005 for the assessment year 2005-06 declaring 'nil' income. However, the tax was paid by the assessee under the MAT on book profits of ₹ 24,93,327/- under Section 115JB of the Act. The said return was processed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue filed two appeals against the separate orders dated 18.5.2010 (Annexure-2) and dated 27.6.2010 for the assessment years 2005-06 and 2006-07 before the Tribunal. The Tribunal vide order dated 30.11.2010 (Annexure-3) upheld the order of the CIT(A) and dismissed the appeals. Hence, the present appeals by the revenue. 5. We have heard learned counsel for the revenue. 6. The primary issue that arises for consideration in this appeal is whether the Tribunal was right in upholding the order of the CIT(A) thereby deleting the addition of ₹ 56,48,840/- made by the Assessing Officer on account of disallowance of interest relatable to investment in capital work in progress. 7. Under the proviso to Section 36(1)(iii) of the Act insert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n progress and claimed not to have borrowed any fresh loan during the relevant period. Nothing was produced by the revenue to show to the contrary. Thus, the deletion of addition of ₹ 56,48,840/- by the CIT(A) was upheld by the Tribunal. The relevant findings recorded by the Tribunal read thus:- We have heard the rival contentions and perused the records. Under the provisions of proviso to Section 36(1)(iii) of the Income Tax Act inserted by Finance Act, 2003 w.e.f. 2004-05, it is provided that such amount of interest paid in respect of capital borrowed for acquisition of assets for the period from date on which the said capital was borrowed for the acquisition of assets till the date the same are put to use, such interest is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 331.68 lacs. 6. The assessee during the year had made an addition of ₹ 36.27 lacs to the said capital work in progress and claimed not to have borrowed any fresh loan during the relevant period. The Revenue had failed to bring on record any evidence to the contrary and in view thereof, we find no merit in disallowing the interest attributable to the investment made in the capital work in progress at ₹ 32.76 lacs during the year. We uphold the order of CIT(A) in this regard. 8. In view of the above, there is no error or perversity could be pointed out in the approach of the Tribunal warranting interference by this Court. Consequently, the substantial question of law is answered accordingly. Finding no merit in the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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