ACIT, CHENNAI V. M/s. Rishabh Infopark P. Ltd., CHENNAI

CO 132/CHNY/2016

• Counselvise Citation: [2017] 112 COUNSELVISE.COM (IT) 4513 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN MARY BA
• Assessee Lawyers: R VENKATESH
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , # , ' ( BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.2175/MDS/2016 '# # /ASSESSMENT YEAR: 2007-08 THE ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE-1(4), 46, NUNGAMBAKKAM HIGH ROAD, CHENNAI. VS. M/S.RISHABH INFOPARK PVT.- LTD., SUPER A-16 & 17, THIRU VI KA INDUSTRIAL ESTATE, GUINDY, CHENNAI-600 032. [PAN: AACCR 9899 K] ( * /APPELLANT) ( +,* /RESPONDENT) CROSS-OBJECTION NO.132/MDS/2016 '# # /ASSESSMENT YEAR: 2007-08 M/S.RISHABH INFOPARK PVT.LTD., SUPER A-16 & 17, THIRU VI KA INDUSTRIAL ESTATE, GUINDY, CHENNAI-600 032. VS. THE ASST. COMMISSIONER OF- INCOME TAX, CENTRAL CIRCLE-1(4), 46, NUNGAMBAKKAM HIGH ROAD, CHENNAI. [PAN: AACCR 9899 K] ( * /APPELLANT) ( +,* /RESPONDENT) ASSESSEE BY : MR.R.VENKATESH, CA DEPARTMENT BY : MS.ANN MARY BABY, JCIT . /DATE OF HEARING : 14.09.2017 . /DATE OF PRONOUNCEMENT : 14.09.2017 ITA NO.2175/MDS/2016 & CO NO.132/MDS/2016 :- 2 -: / O R D E R PER BENCH : ITA NO.2175/MDS/2016 IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-3, CHENNAI, IN ITA NO.19/2013-14/CIT(A)-3 DATED 28.03.2016 FOR THE AY 2007-08 AND CO NO.132/MDS/2016 IS A CROSS-OBJECTION FILED BY TH E ASSESSEE IN THE REVENUES APPEAL. 2. MS.ANN MARY BABY, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND SHRI MR.R.VENKATESH, CA, REPRESENTED ON BEHALF OF T HE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS CHALLEN GED THE ACTION OF THE LD.CIT(A) IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF THE RESTRICTION INTEREST U/S.24(B) OF THE ACT. IT WAS A SUBMISSION THAT THE ASSESSEE IS A COMPANY WHICH IS EARNING INCOME FROM HOUSE PROPERTY. IT WAS A SUBMISSION THAT THE AO HAD DISALLOWED THE INT EREST RELATING TO THE PROJECT-II OF THE ASSESSEE U/S.24(B) OF THE ACT. I T WAS A SUBMISSION THAT LD.CIT(A) HAD FOLLOWING THE DECISION OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2008 -09 HAD DELETED THE ADDITION MADE ON ACCOUNT OF INTEREST DISALLOWED U/S .24(B) OF THE ACT. IT WAS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WA S LIABLE TO BE REVERSED. ITA NO.2175/MDS/2016 & CO NO.132/MDS/2016 :- 3 -: 4. IN REPLY, THE LD.AR SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF BUILDING AND LETTING OUT OF IT PARK AND CONVENTION CENTERS. IT WAS A SUBMISSION THAT FOR THE AY 2007-08 & 2008-09, THE C O-ORDINATE BENCH OF THIS TRIBUNAL HAD IN THE ASSESSEES OWN CASE IN ITA NO.731 & 832/MDS/2012 DATED 15.05.2015 HELD THAT THE INCOME OF THE ASSESSEE IS TO BE ASSESSED UNDER THE HEAD BUSINESS INCOME AND N OT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WAS A SUBMISSION TH AT THE ASSESSEE HAD TAKEN A LOAN OF RS.46.50 CR. FROM ORIENTAL BANK OF COMMERCE AS HAS BEEN MENTIONED IN THE ASSESSMENT ORDER. IT WAS A SUBMIS SION THAT THE SAID LOAN WAS TAKEN FOR SETTING UP OF THE PROJECT-I. IT WAS A SUBMISSION THAT SUBSEQUENTLY, THE ASSESSEE HAD TAKEN FURTHER LOANS FROM BANK OF MAHARASHTRA AND ORIENTAL BANK OF COMMERCE FOR AN AM OUNT OF RS.18.50 CR. AND RS.28.00 CR. RESPECTIVELY AND THE SAME HAD BEEN USED FOR RE- PAYING THE LOAN TAKEN FROM ORIENTAL BANK OF COMMERC E TO AN EXTENT OF RS.46.50 CR. FRESH LOAN HAD TO BE TAKEN FROM OBC AS PROJECT-I HAD BEEN COMPLETED, SO THAT THE NEW LOAN WAS SECURITIZED AGA INST FUTURE LEASE RENTALS (INCOME) FROM THE SAID PROJECT. THE LD.AR DREW OUR ATTENTION TO PAGE NO.60 OF THE PAPER BOOK WHICH WAS THE COPY OF THE STATEMENT OF ACCOUNTS WITH ORIENTAL BANK OF COMMERCE SHOWING THE RE-PAYMENT OF LOAN OF RS.46.50 CR. BY THE LOAN FROM ORIENTAL BANK OF C OMMERCE AND RS.28.00 CR. AND BANK OF MAHARASHTRA FOR RS.18.50 CR. IT WA S A SUBMISSION THAT THE AO HAD DRAWN AN ASSUMPTION THAT THE LOANS TAKEN FROM THE ORIENTAL BANK OF COMMERCE FOR THE AMOUNT OF RS.28.00 CR. WAS IN RESPECT OF THE ITA NO.2175/MDS/2016 & CO NO.132/MDS/2016 :- 4 -: SECOND PROJECT WHICH HAD BEEN STARTED BY THE ASSESS EE DURING THE AY 2007-08 AND WAS COMPLETED ONLY IN THE AY 2009-10. CONSEQUENTLY, THE AO HAD DISALLOWED THE INTEREST IN RESPECT OF THE SA ID LOAN BY APPLYING PROVISIONS OF SEC.24(B) OF THE ACT. ON A QUERY BY THE BENCH, IT WAS SUBMITTED BY HIM THAT PROJECT-II HAD BEEN INDEPENDE NTLY FINANCED, INTEREST IN RESPECT OF WHICH THE PROJECT BEING UN DER PROGRESS, HAD NOT BEEN CLAIMED, BUT CARRIED OVER (TO THE FOLLOWING YE AR) AS PART OF THE PROJECT COST. IT WAS A SUBMISSION THAT THE ASSESSE E HAD NO OBJECTION, IF THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR VER IFICATION AS TO WHETHER THE LOANS TAKEN FROM THE BANK OF MAHARASHTRA AND ORIENT AL BANK OF COMMERCE ON 18.05.2006 & 10.08.2006 RESPECTIVELY WERE USED F OR RE-PAYING THE LOANS TAKEN FROM THE ORIENTAL BANK OF COMMERCE ON 1 7.10.2005 THEREBY SHOWING THAT THE LOAN WAS TAKEN IN RESPECT OF THE P ROJECT-I WHICH WAS COMPLETED AND CONSEQUENT TO WHICH INTEREST WAS LIAB LE TO BE ALLOWED U/S.36(I)(III) ITSELF IN SO FAR AS THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAD IN THE ASSESSEES OWN CASE FOR THE AY 2007-08 IN PA RA NO.7 OF ITS ORDER HAS CATEGORICALLY HELD THAT THE INCOME OF THE ASSES SEE FROM THE RENTING OF THE IT PARK IS TO BE CONSIDERED AS BUSINESS INCOME ONLY. IN RESPECT OF THE CROSS-OBJECTION, IT WAS SUBMITTED BY THE LD.AR THAT THE SAME WAS AGAINST THE RE-OPENING OF THE ASSESSMENT. IT WAS A SUBMISS ION THAT HE DID NOT WISH TO PRESS THE SAME. ITA NO.2175/MDS/2016 & CO NO.132/MDS/2016 :- 5 -: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS TH E LD.AR SUBMITTED THAT HE DID NOT WISH TO PRESS THE CROSS-OBJECTION, THE SAME STANDS DISMISSED AS NOT PRESSED. 6. IN RESPECT OF THE REVENUES APPEAL, ON PERUSAL O F THE PAGE NO.60 OF THE PAPER BOOK WHICH IS A STATEMENT OF ACCOUNT IN R ESPECT OF THE LOAN OF RS.46.50 CR. TAKEN FROM ORIENTAL BANK OF COMMERCE C LEARLY SHOWS THAT THE SAME HAS BEEN RE-PAID BY ANOTHER LOAN FROM ORIE NTAL BANK OF COMMERCE FOR RS.28.00 CR. AND RE-PAYMENT OF RS.18.5 0 CR. REPRESENTING THE LOAN TAKEN FROM BANK OF MAHARASHTRA. HOWEVER, AS THE EVIDENCE WAS NOT BEFORE THE AO, IN THE INTEREST OF NATURAL JUSTI CE, THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR EXAMINATION AS TO WHETHER THE LOAN HAD TAKEN FROM ORIENTAL BANK OF COMMERCE ON 10.08.2006 FOR AN AMOUNT OF RS.28.00 CR. AND THE LOAN TAKEN FROM BANK OF MAHARA SHTRA ON 18.05.2006 FOR AN AMOUNT OF RS.18.50 CR. HAS BEEN USED FOR RE- PAYMENT OF THE LOAN TAKEN FROM THE ORIENTAL BANK OF COMMERCE ON 17.10.2 005 FOR AN AMOUNT OF RS.46.50 CR. IF THE ASSESSEE IS ABLE TO SHOW THA T THE LOANS WERE TAKEN FOR THE RE-PAYMENT OF THE EARLIER LOANS OF RS.46.50 CR. THEN NO DISALLOWANCE OF INTEREST IS LIABLE TO BE MADE IN SO FAR AS THE INCOME OF THE ASSESSEE HAS ADMITTEDLY BEEN HELD TO BE ASSESSED UN DER THE HEAD INCOME FROM BUSINESS AND INTEREST IN RESPECT OF THE SAID L OANS WOULD BE IN RELATION TO THE PROJECT-I, WHICH IS A COMPLETED PROJECT. IN THESE CIRCUMSTANCES, WITH THE ABOVE DIRECTIONS, THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR RE- ITA NO.2175/MDS/2016 & CO NO.132/MDS/2016 :- 6 -: ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE O PPORTUNITY TO SUBSTANTIATE HIS CASE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES & CROSS-OBJECTION FILED BY THE ASSESSEE STANDS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 14 , 2017, AT CHENNAI. SD/- SD/- ( ) ( SANJAY ARORA ) /ACCOUNTANT MEMBER ( # ) (GEORGE MATHAN) ' /JUDICIAL MEMBER /CHENNAI, 2 /DATED: SEPTEMBER 14, 2017. TLN . +'34 54 /COPY TO: 1. * /APPELLANT 4. 6 /CIT 2. +,* /RESPONDENT 5. 4 +'' /DR 3. 6 ( ) /CIT(A) 6. # /GF