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TMI Blog2017 (3) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... considered opinion, the issue as to whether the amount involved is actually revenue in nature needs to be remitted to the file of the Assessing Officer. Accordingly the issue is remitted to the file of the Assessing Officer. The Assessing Officer shall examine this issue after giving the assessee an opportunity of being heard. After due examination if he finds that the amount involved was revenue in nature liable to be debited to the profit and loss account, the assessee's claim would deserve to be allowed - Decided in favour of assessee for statistical purposes - I.T.A. No. 18/Nag/2011 - - - Dated:- 21-3-2017 - Shri Shamim Yahya, Accountant Member And Shri Ram Lal Negi, Judicial Member Appellant by : Shri C.J. Thakar Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was admittedly suffering huge losses year after year and were not even able to pay huge bank loans or interest and was almost a sick company. 2. Brief facts of the case are as under : In this case in the course of assessment proceedings the appellant has raised an issue vide letter dated 21-02-2008 that interest paid on term loans treated on preoperative expenditure of ₹ 2,39,44,064/- and capitalized in the balance sheet was not claimed as revenue expenditure in the audited profit and loss account but would have to be adjusted for the purpose of working out book profits. If this is claimed then there would be no book profit available. The AO has considered the same in the assessment order and discussed the issue as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more stands as revenue expenditure as contended by the assessee. Hence, this is nothing but another after thought of the assessee. Further, the notice u/s 148 was issued requiring assessee to furnish the return of income but the assessee did not file revised return of income in response to notice u/s 148 of the I.T. Act, in view of this, the unpaid expenses relating to long term loan and medium term loan being relatable preoperative expenses do not deserve to be allowed as revenue expenditure . As far as the claim of income/expenditure/deduction/exemption is concerned the assessee should have filed revised return of income in view of the decision of Hon ble Supreme Court in the case of Goetze (India) Ltd. Vs. Commissioner of Income t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We have heard both the counsel and perused the records. Learned counsel of the assessee submitted that there has been a wrong treatment in the accounts of the assessee regarding the terms loon interest and LC interest. Learned counsel submitted that the company has been in operation for several years and that there is no reason why the term loan interest on machinery should be added to the cost of the machine in the current year. Further learned counsel submitted that since the company is already functioning and in operation there is no reason as to why any portion of the interest should be treated as preoperative expenses. Learned counsel submitted that prima facie the only reason that can be attributed for this treatment is that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies Act. In such situation assessee's plea will have to be accepted. This view draws support from the case law from Honourable Delhi High Court referred here in above. We may gainfully refer to the head notes in the said decision as under : Company-Book profit under s. 11sJ-Depreciation not debited to P L a/c-It is obligatory under cl. 3(iv) of Part 11 of Sch. VI to the Companies Act to give information with regard to depreciation which has not been provided for, along with the quantum of arrears-Once this information is disclosed in the notes to the accounts, it would clearly fall within the ambit of the Explanation to s. 11s)-Notes to the accounts form part of the P L a/c by virtue of sub-so (6) of S. 211 of the Companies Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. Learned CIT(Appeals) also has principally agreed with the proposition of the assessee but has held that adequate materials are not on record. In these circumstances in our considered opinion, the issue as to whether the amount involved is actually revenue in nature needs to be remitted to the file of the Assessing Officer. Accordingly the issue is remitted to the file of the Assessing Officer. The Assessing Officer shall examine this issue after giving the assessee an opportunity of being heard. After due examination if he finds that the amount involved was revenue in nature liable to be debited to the profit and loss account, the assessee's claim would deserve to be allowed 10. In the result this appeal by the assessee stan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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