Appeal details
Counselvise Citation
[2022] 103 COUNSELVISE.COM (IT) 9529 (ITAT-VISAKHAPATNAM)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
17 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
27-10-2022
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
12-10-2022
Assessment Year
2010-2011
Appeal Filed On
10-10-2022
Judgement Text
आयकरअपीलीयअधिकरण, धिशाखापटणमपीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLEJUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकरअपील सं./I.T.A.No.153/Viz/2022& 157/Viz/2022 (निर्धारण वर्ा/ Assessment Year : 2010-11 & 2017-18) Asst.Commissioner of Income Tax Circle-1(1) Guntur Vs. M/s Andhra Pradesh State Housing Corporation Ltd., Vijayawada [PAN : AABCA7206L] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) Cross Objection No.16/Viz/2022 &17/Viz/2022 (Arising out of 153/Viz/2022& 157/Viz/2022) (निर्धारण वर्ा/ Assessment Year : 2010-11 & 2017-18) M/s Andhra Pradesh State Housing Corporation Ltd., Vijayawada [PAN : AABCA7206L] Vs. Dy.Commissioner of Income Tax Circle-1(1) Guntur (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) राजस्व की ओर से / Revenue by : Shri M.N.Murthy Naik, CIT(DR) निर्ााररती की ओर से / Assessee by : Shri C.Subrahmanyam, AR सुिवधई की तधरीख/ Date of Hearing : 13.10.2022 घोर्णध की तधरीख/Date of Pronouncement : 28.10.2022 O R D E R Per Bench: These appeals are filed by the revenue against the orders of the Commissioner of Income Tax(Appeal) [in short, [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi dated 28.06.2022 and 06.07.2022 for the 2 ITA No.153 & 157/Viz/2022, CO No.16 &17/Viz/2022, A.Y.2010-11& 2017-18 Andhra Pradesh State Housing Corporation Ltd., Vijayawada Assessment Year (A.Y.) 2010-11 and 2017-18 respectively and the cross objections are filed by the assessee in support of the orders of the Ld.CIT(A). Since the grounds raised in these appeals are common, these appeals are clubbed, heard together and a common order is being passed and the grounds are extracted from I.T.A.No.157/Viz/2022, for the sake of convenience as under. 1. The order of the Ld.Commissioner of Income Tax (Appeals), NFAC, Delhi is erroneous both in law and on facts of the case. 2. The Ld.Commissioner of Income Tax (Appeals), NFAC, Delhi erred, in granting relief to the assessee by allowing the interest expenditure disallowed by the AO, without considering the fact that revenue’s appeals are pending before Hon’ble High Court for the previous years on the same issue. 3. Whether the Ld.CIT(A) is correct in only allowing 15% of interest received to be added to the income of the assessee when the assessee has not declared any receipts from its activity of executing housing projects for beneficiaries, nor has the assessee submitted complete details of the recoveries made. 4. The Ld.CIT(A) failed to appreciate the facts that assessee had not produced any evidence in respect of interest payments on loan. 5. Any other grounds that may be urged at the time of hearing. 2. Brief facts of the case are that the assessee company is an undertaking by the Government of Andhra Pradesh, engaged in the construction of subsidized housing for the weaker sections of the society. The assessee company filed it’s return of income for the A.Y.2010-11 on 3 ITA No.153 & 157/Viz/2022, CO No.16 &17/Viz/2022, A.Y.2010-11& 2017-18 Andhra Pradesh State Housing Corporation Ltd., Vijayawada 30.09.2010, declaring a loss of Rs.6,30,40,41,456/- and for the A.Y.2017-18, the assessee declared a loss of Rs.2,82,31,950/-. The case was selected for scrutiny and the assessment was completed determining the total income of Rs.(-)6,30,40,41,456/- for the A.Y.2010-11 and Rs. for the A.Y.2017-18. 4. The crux of the issue in the present appeal relates to disallowance of interest expenditure of Rs.5,99,05,96,560/- and Rs.11,18,49,291/- for the A.Y.2010-11 and 2017-18 respectively by the AO. The AO observed that the assessee is involved in construction of low cost housing to the beneficiaries belonging to the weaker sections of the society. The projects are funded by subsidies and grants from Government, loan from banks and financial institutions and contribution from beneficiaries. The assessee company provides finances by way of loans to the beneficiaries as per AP Government policy and recovers the loan altogether with interest in instalments. The assessee receives subsidy from the Government of Andhra Pradesh as part of the loan. The loan amount for which the Government stood as guarantor is disbursed to beneficiaries by normal rate of interest and recoveries from the beneficiaries are shown as liability. The repayment of principal and interest for which the Government stood as guarantor is disbursed to beneficiaries are shown as liability. The repayment of principal and interest for which loan is made by the Government on behalf 4 ITA No.153 & 157/Viz/2022, CO No.16 &17/Viz/2022, A.Y.2010-11& 2017-18 Andhra Pradesh State Housing Corporation Ltd., Vijayawada of the company and the same is treated as loans given to the Government. In the instant case, the Government pays the principal and interest on behalf of the company. The amounts so paid towards repayment of loans are treated as loans given to the company. Hence the interest on loans forms part of the expenditure and debited to the income and expenditure account. The AO opined that the interest on loans cannot be claimed as expenditure in the hands of the assessee and the same is to be disallowed. Aggrieved by the order of the AO, the assessee is in appeal before the CIT(A). The Ld.CIT(A) considering the submissions of the assessee stated that a similar issue has been adjudicated upon by the ITAT ‘A’ Bench, Hyderabad in its order in I.T.A. No.376 to 381/Hyd/2010, dated 21.01.2011, which was also followed by the Tribunal in assessee’s own case in I.T.A. No.1499/Hyd/2016 dt.26.05.2017 for the A.Y.2011-12. Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before us. 5. The Ld.DR submitted that the Revenue preferred an appeal before the High Court of Andhra Pradesh and Telangana in tune with the Departmental policy to keep the matters alive. 6. Per contra, the Ld.AR submitted that the assessee’s case is covered by the order of the ITAT in it’s decision inI.T.A. No.376 to 381/Hyd/2010, 5 ITA No.153 & 157/Viz/2022, CO No.16 &17/Viz/2022, A.Y.2010-11& 2017-18 Andhra Pradesh State Housing Corporation Ltd., Vijayawada dated 21.01.2011 and also in I.T.A.No.1499/Hyd/2016 dated 26.05.2017 for the A.Y.11-12 (supra). 7. We have heard the rival contentions, perused the material available on record and the orders of the Authorities below. We find that the Ld.CIT(A) in his order has followed the decision of the Hon’ble ITAT Hyderabad ‘A’ Bench in ITA No.376 to 381/Hyd/2010 dated 21.01.2011, which was followed in the assessee’s own case for the A.Y.2011-12 also in ITA No.1499/Hyd/2016 dt.26.05.2017. Relevant portion of the decision of the Hyderabad Tribunal ‘A’ Bench in ITA No.376 to 381/Hyd/2010 is extracted herein below for reference : “5. We have considered the submissions of both the parties and perused the material available on record. The learned counsel for the assessee clearly proved that the assessee company is not in the business of construction of houses. Hence, there is no question of offering income from the construction activity. We find that the income of the assessee corporation only comprises of admission fees, supervision charges, interest, differential cost of cement and other material and managerial subsidy from the State Government. We find merit in the argument of the learned counsel for the assessee that, due to the G.Os issued by the State Government from time to time for one time settlement of dues or waiver of interest, the Assessee Corporation has not collected any interest from the beneficiaries and also the principal amount in several cases. However, it is fact that some amounts are recovered from the beneficiaries and the same are shown as ‘recoveries from the beneficiaries’ in the Balance Sheet. There is no dispute with regard to the payment of interest to the bank and financial institutions. The department disallowed the entire interest payment made by the assessee corporation only on the ground that the assessee has not offered any income on interest recovered from its beneficiaries. After considering the totality of facts and the circumstances of the case, we are of the view that the lower authorities are not correct in disallowing the interest payment to various commercial banks and financial institutions. Hence, we allow the grounds raised by the assessee on this issue. However, we direct the assessee Corporation to furnish the details of interests received from its beneficiaries for all the assessment years under consideration and we direct the assessing officer to treat the said interest 6 ITA No.153 & 157/Viz/2022, CO No.16 &17/Viz/2022, A.Y.2010-11& 2017-18 Andhra Pradesh State Housing Corporation Ltd., Vijayawada receipts as the income of the assessee Corporation in the respective assessment years. Accordingly, the ground raised by the assessee is partly allowed as indicated above.” 8. Respectfully following the decision of the Coordinate Bench of ITAT, Hyderabad in assessee’s own case, we do not see any reason to interfere with the order of the Ld.CIT(A) on the issue. Thus, ground No.2 raised by the Revenue is dismissed. 9. The cross objections raised by the assessee are supportive in nature and therefore they need no separate adjudication. 10. In the result, the appeals of the revenue are dismissed and the cross objections of the assessee are disposed off. Order pronounced in the open court on 28 th October, 2022. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरुआर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 28.10.2022 L.Rama, SPS 7 ITA No.153 & 157/Viz/2022, CO No.16 &17/Viz/2022, A.Y.2010-11& 2017-18 Andhra Pradesh State Housing Corporation Ltd., Vijayawada आदेश की प्रनतनिनि अग्रेनषत/Copy of the order forwarded to:- 1. रधजस्व/The Revenue –Dy.Commissioner of Income Tax, Central Circle-1, 3 rd Floor, Raj Kamal Complex, Lakshmipuram Main Road, Guntur 2.निर्धाऩरती/ The Assessee–M/s Andhra Pradesh State Housing Corporation Ltd., Plot No.11 & 12, Nirman Bhavan, APIIC Colony, Near JAMAC Housing Complex, GurunanakColony,Auto Nagar, Vijayawada 3. The Principal Commissioner of Income Tax (Central), Visakhapatnam 4. The Commissioner of Income Tax (Appeals)-3, Visakhapatnam 5.नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम/ DR,ITAT,Visakhapatnam6.गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam
