Interest paid is treated as compensatory and allowed under section 37(1)

Last updated: 05 August 2013

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Facts in brief:- The assessee company is engaged mainly in the business of manufacture and sale of auto parts. During the year under reference the assessee company was in the process of setting up a plant for manufacturing of various auto components i.e. fuel tanks, grip rear, step assembly, frame for two wheelers segment. The assessee company is a joint venture between JBM Group and Thai Summit Group of Thailand. The company is running three manufacturing units at Gurgaon (Haryana), Chakan (Pune) and Hosur (Tamil Nadu). During the impugned Assessment Year, the appellant had set up a new manufacturing unit at Pantnagar in Uttarakhand. The assessee filed its return of income for the Assessment Year 2008-09 declaring a loss of Rs.21.07 crores on 30th September, 2008. Subsequently a revised return of income was filed on 12th March, 2010 declaring a loss of Rs.22,29,57,473/-. The Assessing Officer passed an order u/s 143(3) on 20.12.2010 assessing the loss at Rs.19,35,83,997/- inter alia making additions on account of disallowance of expenses on Pant Nagar Unit on the ground that these are preoperative expenses, prior period expenses etc. Aggrieved the assessee carried the matter in appeal.

Citation :
ACIT, Circle 16(1) New Delhi (Appellant) Vs. M/s Thai Summit Neel Auto P.Ltd. 601, Hemkunt Chambers 89, Nehru Place New Delhi 110 019 PAN: AABCT 9860 D (Respondent)