COMMISSIONER OF INCOME TAX Vs. KCP SUGARS INDUSTRIES CORPORATION P LTD

JUDGEMENT

(1.) THE Revenue is on appeals as against the common order of the Income Tax Appellate Tribunal, Bench "A", Chennai, dated 12.5.2006 relating to the assessment years 1999-2000 and 2000-2001 respectively raising the following question of law :-

(2.) THE assessee is engaged in manufacture of Sugar, Alcohol, Acetic acid and sugar equipments. T.C.(A) Nos. 25 and 26 of 2007 are relates to assessment year 1999-2000 and T.C.(A) No.27 of 2007 relates to assessment year 2000-2001 and the corresponding accounting years ended on 31.3.1999 and 31.3.2000 respectively. For the assessment year 1999-2000, the assessee filed a return of income on 29.12.1999 declaring a total income of Rs. 3,74,04,750/- under Section 115J of the Income Tax Act, 1961 (hereinafter referred to as "the Act") and the same was processed under Section 143(l)(a) of the Act on 24.8.2000 and determined the refund due to the assessee company is at Rs. 93,93,466/-. Later the case was taken up for scrutiny and the assessment was completed under Section 143(3) of the Act. The assessing officer determined the total income at Rs. 19,04,15,780/-. While completing the assessment, the assessing officer treated the additional realisation as revenue receipt. Aggrieved by that, the assessee has filed an appeal before the Commissioner of Income Tax (Appeals)-III, Chenhai. The Commissioner of Income Tax (Appeals) allowed the appeal partly. Aggrieved by that order, the Revenue has filed an appeal before the Income-Tax Appellate Tribunal . The Tribunal dismissed the appeal filed by the Revenue.

(3.) THE third question of law relates to the assessment years 1999-2000 and 2000-2001. For these two assessment years, the issue involved relates to claim of interest in respect of borrowed capital and whether the same is liable for deduction under Section 36(l)(iii) of the Act. The assessing officer disallowed the interest on the ground that no details have been furnished by the assessee and held that the claim of interest on term loan availed for incurring capital expenditure towards plant and machinery was treated as capital expenditure. Aggrieved by that order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)-III, Chennai. The Commissioner allowed the appeal for both the assessment years. Aggrieved by that order, the Revenue has filed an appeal before the Income-Tax Appellate Tribunal. The Tribunal dismissed the appeal filed by the Revenue. Aggrieved by that order, the Revenue filed the above appeals.