S. H. Kapadia, J. - (1.) For the sake of convenience we state the facts occurring in Civil Appeal Nos.3952-55 of 2002 - Dy. Commr. of Income Tax, Ahmedabad vs. M/s. Core Health Care Ltd.
(2.) These civil appeals are directed against judgment and order dated 25.4.01 delivered by Gujarat High Court in Tax Appeal Nos. 449 and 450 of 2000 and in Civil Application Nos. 53 and 54 of 2001 whereby the Departments appeals, under Section 260A of the Income-tax Act, 1961, stood dismissed.
(3.) On 31.12.92 assessee filed its return of income for A.Y. 1992-93 declaring "nil" income. Later on the assessee filed a revised return on 6.8.93 declaring a loss of Rs.1, 11,68,543/-. Assessee-company is engaged in the business of manufacturing and sale of intravenous solutions. For the assessment year under consideration assessee claimed deduction towards expenses aggregating to Rs. 2, 12,05,459/- which included interest on borrowings of Rs.1,56,76,000/-. During the assessment year under consideration assessee had installed new machinery. The A.O. vide assessment order dated 30.3.95 disallowed the amount of Rs.1,56,76,000/- placing reliance on the judgment of this Court in Challapalli Sugars Ltd. and Anr. vs. Commissioner of Income-tax, A.P. and Anr. (1975) 98 ITR 167, inter alia, on the ground that during the assessment year under consideration assessee had installed new machinery on which production had not started. On appeal, vide order dated 15.11.96, CIT (A) confirmed the addition of interest amount on borrowings of Rs.1,56,76,000. Therefore, both the authorities, namely, the A.O. and CIT (A) added the said amount of Rs.1,56,76,000/- to the income of the assessee. The matter was carried in appeal by the assessee. Vide order dated 6.6.2000 the Tribunal held that the Department was not justified in adding Rs.1,56,76,000/- to the income of the assessee. In other words, the Tribunal held that the A.O. was not justified in making disallowance of Rs.1,56,76,000/- in respect of borrowings utilized for purchase of machinery. This decision was confirmed by the High Court, hence these civil appeals are filed by the Department.;