O/TAXAP/500/2007 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 500 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER 1 Whether Reporters of Local Papers may be allowed to see judgment? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to civil judge? COMMISSIONER OF INCOME TAX....Appellant(s) Versus ARVIND INTEX LTD. Opponent(s) Appearance: MR MANISH BHATT, SENIOR COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE for Appellant(s) No. 1 MS SALONI PATEL, ADVOCATE for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE KS JHAVERI Page 1 of 4 O/TAXAP/500/2007 JUDGMENT and HONOURABLE MR.JUSTICE K.J.THAKER Date : 11/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with impugned order passed by Income Tax Appellate Tribunal, Ahmedabad Bench (hereinafter referred to as Tribunal ) dated 25.08.2006 in ITA No. 2092/Ahd/2001 for Assessment Year 1996-97, revenue has preferred present Tax Appeal. 1.1 This appeal was admitted by this Court on 20.09.2007 for consideration of following substantial question of law: Whether Appellate Tribunal is right in law and on facts in confirming order of CIT(A) allowing claim of Rs. 1,37,61,958/- u/s 36(1)(iii) of Act, in respect of interest incurred on borrowed funds utilised for purchase of machinery? 2. assessee firm is engaged in business of manufacturing yarns using process called Ring Spinning process. During course of assessment proceedings, assessing officer noticed that assessee had borrowed funds for purchase of machinery on which interest charged was paid and same was capitalized in books of accounts and that assessee claimed this amount as revenue expenditure in return of income. Assessing Page 2 of 4 O/TAXAP/500/2007 JUDGMENT Officer rejected claim of assessee. On appeal CIT (Appeals) held that treatment in account does not determine allowability of expenditure and interest is allowable as revenue expenditure. 2.1 On appeal before Tribunal, by impugned order, Tribunal upheld order of CIT(A). Being aggrieved and dissatisfied with impugned order passed by Tribunal, revenue has preferred present Tax Appeal for consideration of aforesaid substantial question of law. 3. issue involved in present Tax Appeal is now squarely governed by decision of this Court in case of Gujarat State Fertilizer and Chemicals Ltd v. ACIT reported in 313 ITR 244 (Guj) wherein this Court has held in favour of assessee. 4. Mr. Manish Bhatt, learned Senior Advocate appearing with Ms. Mauna Bhatt, learned advocate on behalf of revenue is not in position to dispute above and is not in position to show and/or point out any contrary decision. 5. Having heard learned advocates appearing on behalf of parties and question posed for consideration before us reproduced hereinabove and considering decision of this Court in case of Gujarat State Fertilizer and Chemical ltd. (Supra), question which is raised in present appeal is required to be answered in favour of assessee. We are not giving further elaborate reasons for same as in case of Gujarat State Fertilizer and Chemical (Supra) this Court has already answered question in favour of Page 3 of 4 O/TAXAP/500/2007 JUDGMENT assessee. Accordingly, question is answered in affirmative i.e. against appellant revenue and in favour of assessee. 6. In view of above, impugned judgment and order passed by Tribunal is confirmed. Hence, present Tax Appeal is dismissed. (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 4 of 4 Commissioner of Income-tax v. Arvind Intex Ltd