Delhi High Court
Pcit, Delhi-7 vs Ratnagiri Gas And Power Pvt. Ltd. on 13 October, 2022
$~42
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 394/2022
PCIT, DELHI-7 ..... Appellant
Through: Mr.Sunil Kumar Agarwal,
Sr.Standing Couns el for the Revenue
with Mr.Tushar Gupta and
Mr.Utkarsh Tiwari, Advocates.
versus
RATNAGIRI GAS AND POWER PVT. LTD. ..... Respondent
Through: Mr.Ved Jain with Mr.Nischay
Kantoor, Advocates.
Date of Decision: 13th October, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
MANMOHAN, J:
C.M.No.44240/2022
Exemption allowed, subject to all just exceptions.
Accordingly, the application stands disposed of.
ITA No.394/2022
1. Present Income Tax Appeal has been filed challenging the order dated
25th January, 2021 passed by the Income Tax Appellate Tribunal ('ITAT')
in ITA 2952/Del./2019 for the Assessment Year 2013-14.
Signature Not Verified
Digitally Signed By:JASWANT
Signing Date:14.10.2022
18:34:46
2. Learned counsel for the Appellant states that the ITAT has erred in
confirming the findings of CIT (A) on the disallowance under Section
36(1)(iii) of the Income Tax Act, 1961 ('the Act') ignoring the fact that the
CIT (A) had wrongfully assumed that the facts of the present case were
similar to that of previous Assessment Year 2012-13. He emphasises that
the ITAT has erred in assuming that Revenue had accepted the order of
CIT(A) for the previous Assessment Year 2012-13 ignoring the fact that the
same was after fresh examination by the Assessing Officer during remand
proceedings, which was not the case in the present year under
consideration.
3. A perusal of the paper book reveals that the CIT(A) in the present
case has observed as under:-
"5.2 It is noted that similar issue was adjudicated by my predecessor
for A.Y. 2012-13 in vide order dated 30.11.2016 in Appeal No:
118/CIT(A)-7/Del/15-16 which was allowed. Operative part of the order is
reproduced as under:
xxx xxx xxx
"2.5 Thus it can be seen that the said ratio of capitalization of
interest cost by the assessee company is merely on the basis of the
assumption of the assessee based on the cost of 2500 crores of
LNG terminal adopted in the year 20. The assumption does not
have any base or proper support or scientific reasoning. The
CWIP as on date is 3845.22 crores on account of Plant &
Machinery and construction stores only. In fact the other
infrastructure like building, roads etc are also to be apportioned
to the CWIP which the assessee company has not made. Thus
there is no justification for capitalization of finance cost/interest
in the ratio of 1:3 as explained by the assessee. Thus it is clear
that the ratio adopted by the assesse company is without and
proper base, supporting documentary evidence and justification
and therefore has been used as a tool to divert more cost in profit
and loss a/c. therefore, the apportionment done by the assessee is
not acceptable and in the absence of any rational basis, the same
Signature Not Verified
Digitally Signed By:JASWANT
Signing Date:14.10.2022
18:34:46
is required to be done on a more scientific and reasonable
method.
2.6 On the perusal of the balance sheet of the assessee company,
it is noticed that the entire outstanding liability of the assessee
company bearing interest is Rs.8,998.99 crores (8676.52 crores,
Non-current liabilities + 322.47 crores, current liabilities). The
interest cost is thus required to be reallocated in the ratio of
CWIP of 3845.22 crores and total interest bearing liabilities of
Assessee Company i.e. 8998.99 crores. Accordingly, the interest
to the extent of Rs. 351.25 crores is required to be capitalized.
Keeping in view that the assessee has already capitalized on
interest of Rs. 179.43 crores, the balance interest of 145.82
crores is further required to be disallowed u/s 36(1)(iii) of the Act,
and to be capitalized towards the cost of CWIP and added to the
income of the assessee company for the computation of taxable
income of the assessment year under consideration.
xxx xxx xxx
5.3 Since the facts are similar in the present appeal, no interference is
called for with my predecessor. Therefore, addition of Rs.2,15,05,00,000/-
u/s 36(1)(iii) on account of Interest attributed to work in progress made by
the AO is deleted. This ground of appeal is ruled in favour of the
appellant."
4. This Court also finds that the Revenue has not provided any specific
fact either in the grounds or before the appellate authorities below, which
suggest that the facts of Assessment Years 2012-13 and 2013-14 are
different.
5. Furthermore, both the appellate authorities below have recorded the
concurrent findings of fact that the facts in present case are similar to the
facts involved in the Assessment Year 2012-13. Consequently, this Court
is of the view that the present matter is covered by the decision of the ITAT
in the previous Assessment Year, which has not been appealed till date and
has accordingly attained finality.
Signature Not Verified
Digitally Signed By:JASWANT
Signing Date:14.10.2022
18:34:46
6. The Supreme Court in the case of Ram Kumar Aggarwal & Anr.
vs. Thawar Das (through LRs), (1999) 7 SCC 303 has reiterated that under
Section 100 of the Code of Civil Procedure, the jurisdiction of the High
Court to interfere with the orders passed by the Courts below is confined to
hearing on substantial question of law and interference with finding of
the fact is not warranted if it involves re-appreciation of evidence. Further,
the Supreme Court in State of Haryana & Ors. vs. Khalsa Motor Limited
& Ors., (1990) 4 SCC 659 has held that the High Court was not justified in
law in reversing, in second appeal, the concurrent finding of
the fact recorded by both the Courts below. The Supreme Court in Hero
Vinoth (Minor) vs. Seshammal, (2006) 5 SCC 545 has also held that "in a
case where from a given set of circumstances two inferences of fact are
possible, the one drawn by the lower appellate court will not be interfered
by the High Court in second appeal. Adopting any other approach is not
permissible." It has also held that there is a difference between a 'question
of law' and a 'substantial question of law'.
7. Consequently, no substantial question of law arises for consideration
in the present appeal and accordingly, the same is dismissed.
MANMOHAN, J
MANMEET PRITAM SINGH ARORA, J
OCTOBER 13, 2022
KA
Signature Not Verified
Digitally Signed By:JASWANT
Signing Date:14.10.2022
18:34:46
