Lanco Hills Technology Park Private Limited, Hyderabad V. Income Tax Officer, Ward-15(1), Hyderabad

ITA 1125/Hyd/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4512 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 16-03-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Capital asset; Business income; Period of limitation; Capital receipt; Time period of passing order
• Section: 143(3); 13; 22; 27; 6; 28; 2; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO S . 1125 & 1126 /HYD/20 18 (ASSESSMENT YEAR S : 20 07 - 08 & 2011 - 12 ) M/S. LANCO HILLS TECHNOLOGY PARK PVT. LIMITED, HYDERABAD. PAN AABCL 1228R ..APPELLANT. VS. INCOME TAX OFFICER, WARD 16(1), HYDERABAD. ..RESPONDENT. ITA NOS.1127 & 1128/HYD/2018 (ASSESSMENT YEARS : 2012 - 13 & 2013 - 14) M/S. LANCO HILLS TECHNOLOGY PARK LIMITED, HYDERABAD. ..APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE16(1), HYDERABAD. ..RESPONDENT. APPELLANT BY : SHRI P. MURALI MOHANA RAO. RESPONDENT BY : SHRI YVST SAI (D.R.) DATE OF HEARING : 16.03.2021 . DATE OF PRONOUNCEMENT : 07. 09 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : THESE FOUR ASSESSEE'S APPEALS FOR ASSESSMENT YEARS 2007 - 08 AND 2011 - 12 TO 2013 - 14 ARISE FROM THE 2 ITA NO S . 1125 TO 1128/HYD/2018 COMMISSIONER OF INCOME TAX (APPEALS) - 4, HYDERABADS SEPARATE ORDERS; ALL DT.12.03.2018 PASSED IN CASE NOS .0092/2014 - 15/ ITO, WARD 16(1)/ CIT(A) - 4 / HYD /17 - 18; 0095/2014 - 15/ITO, WARD 16(1)/ CIT(A) - 4 / HYD /17 - 18; 0168/2015 - 16/ DCIT, CIR.16(1) / HYD / 17 - 18 AND 0076/2016 - 17/ DCIT, CIR.16(1) / HYD / 17 - 18 INVOLVING PROCEEDINGS U/S. 143(3) R.W.S. 254 IN FIRST AND U/S 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT') IN LAT T ER THREE APPEALS; RESPECTIVELY. HEARD BOTH THE PARTIES. CASE FILES STAND PERUSED. 2. IT EMERGES DURING THE COURSE OF HEARING THAT ALL THESE APPEALS RAISE IDENTICAL / INTERCONNECTED ISSUE S. WE THUS PROCEED ASSESSMENT YEAR WISE FOR THE SAKE OF CONVENIENCE AND BREVITY. ASSESSMENT YEAR 2007 - 08 (ITA NO.1125/HYD/2018) 3. THE ASSESSEE PLEADS THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL : 2 . THE LEARNED CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT AS PER GUIDELINES OF AS - 10 EXPENSES ON CAPITAL ASSET SHOULD BE CAPITALIZED ONLY IF IT INCREASES THE EFFICIENCY OF 3 ITA NO S . 1125 TO 1128/HYD/2018 ASSET AND THAT LITIGATION EXPENSES CANT ENHANCE THE EFFICIENCY ASSET. 3. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT DEDUCTIBILITY OF LEGAL EXPENSES WILL DEPEND ON NATURE AND PURPOSE OF LEGAL PROCEEDING IN RELATION TO BUSINESS WHOSE PROFITS ARE UNDER COMPUTATION AND CANNOT BE AFFECTED BY FINAL OUTCOME OF THAT PROCEEDINGS. REFER VIVEK P TALWAR V ACIT 8 TAXMANN.COM.268. 4. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE EXPENDITURE INCURRED FOR LITIGATION OF PROPERTIES AND SUCH FINAL OUTCOME PROCEEDINGS CANT AFFECT THE BUSINESS INCOME. 5. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ABOVE EXPENDITURE IS EXCLUSIVELY FOR BUSINESS PURPOSE AND SUCH EXPENDITURE CANT BE CAPITALIZED. 4. BOTH THE LEARNED REPRESENTATIVES TAKE US TO CIT(A)S DETAILE D DISCUSSION DISALLOWING THE ASSESSEE'S LEGAL EXPENSES CLAIM OF RS.11,93,851 AS FOLLOWS : 4 ITA NO S . 1125 TO 1128/HYD/2018 -- SPACE LEFT INTENTIONALLY 5 ITA NO S . 1125 TO 1128/HYD/2018 6 ITA NO S . 1125 TO 1128/HYD/2018 7 ITA NO S . 1125 TO 1128/HYD/2018 5. HEARD RIVAL CONTENTIONS AGAINST AND IN SUPPORT OF THE IMPUGNED LEGAL EXPENDITURE CLAIM. WE MAKE IT CLEAR THAT THE DISPUTE HEREIN IS NOT THAT OF LACK OF GENUINENESS ELEMENT IN ASSESSEE'S LEGAL EXPENSES CLAIM BUT RE GARD ING THE CLINCHING ASPECT AS U NDER WHICH HEAD IT FALLS I.E. CAPITAL OR REVENUE NATURE GOING BY THE DEPARTMENT S AND ASSESSEE S 8 ITA NO S . 1125 TO 1128/HYD/2018 RESPECTIVE STAND S . IT EMERGES FROM A PERUSAL OF THE TRIBUNALS FIRST ROUND ORDER IN TAXPAYER APPEAL ITA 317/HYD/2011 DT.8.6.2012 THAT THE LEARNED CO - ORDINATE BE NCH HAS DIRECTED THE ASSESSING OFFICER TO ALLOW EXPENDITURE ITEMS WHICH ARE NOT DIRECTLY ATTRIBUTABLE TO THE DEVELOPMENT OF THE PROJECT BUT ARE INCURRED FROM YEAR TO YEAR FOR GENERAL RUNNING OF THE BUSINESS. THE REVENUE FAILS TO REBUT THE CLINCHING FACT THAT NEITHER THE LEARNED LOWER AUTHORIT IES PIN - POINT THE SPECIFIC NEXUS BETWEEN THE ASSESSEES IMPUGNED LEGAL EXPENSES VIS - - VIS THE CORRESPONDI NG REAL ESTATE DEVELOPMENT PROJECT S NOR THERE IS ANY DISPUTE ABOUT THE IDENTICAL EXPENDITURE RESTORED TO THE SAID AUTHORITY IN THE COMPOSITE REM AND ORDER IN ASSESSMENT YEAR 2006 - 07 STAND ACCEPTED AND FURTHER ALLOWED IN THE LOWER APPELLATE ORDER HEREIN PER TAINING TO ASSESSMENT YEAR 2011 - 12 IN PARAS 8 TO 8.3 ( A SUM OF RS.15.10 LAKHS ) . WE THEREFORE ACCEPT THE ASSESSEE'S INSTANT LEGAL EXPENDITURE CLAIM AS FALLING UNDER REVENUE HEAD ONLY. ITS FIRST AND FOREMOST APPEAL IN ITA 1125/HYD/2018 SUCCEEDS. 9 ITA NO S . 1125 TO 1128/HYD/2018 ASSESSME NT YEAR 2011 - 12 (ITA NO.1126/HYD/2018) 6. THE ASSESSEE HAS PLEADED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL : 2. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE EXPLANATION OF THE ASSESSEE THAT THE LEASE RENTAL INCOME WAS RECEIVED FROM INCUBATION BUILDING WHICH WAS A TEMPORARY WORK PLACE FOR THE CLIENTS AND THAT THE INCOME ARISING OUT OF THIS WAS INCIDENTAL TO MAIN BUSINESS ACTIVITY. THAT THEREFORE, THE SAME CONSTITUTES INCOME FROM BUSINESS AND THE ASSESSEE IS RIGHT IN REDUCING IT FROM CAPITAL WORK IN PROGRESS. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT SINCE THE LEASE RENTAL INCOME IS PRIOR PERIOD TO THE COMMENCEMENT OF BUSINESS, IT IS IN THE NATURE OF CAPITAL RECEIPT AND, HENCE, IS REQUIRED TO BE SET OFF AGAINST T HE PRE - OPERATIVE EXPENSES. 4. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE LAW POSITION THAT THE INCOME ARISING FROM LEASE OF AN HOUSE OR A BUILDING WILL CONSTITUTE R ETHER INCOME FROM THE' HOUSE PROPERTY' OR 'INCOME PROFITS AND GAINS OF BUSINESS' AND NOT OTHER SOURCE INCOME. 5. THE LD. CIT (A) ERRED IN UPHOLDING THE TREATMENT OF LEASE RENTALS AS THAT OF 'OTHER SOURCE OF INCOME' AND TO TAX INDEPENDENTLY, EVEN WITHOUT ALLOWING THE EXPENDITURE CONNECTE4D WITH EARNING OF INCOME, IN TERMS OF SECTION 57 (III) OF THE ACT. 10 ITA NO S . 1125 TO 1128/HYD/2018 6. THE LD.CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT ACCORDING TO PROVISIONS OF ACCOUNTING STANDARD - 16, ANY INTEREST EARNED ON THE BORROWINGS INVESTED FOR SHORT PERIODS, REQUIRES THAT INCOME TO BE SET OFF AGAINST THE BORROWING COS T. 7. THE LD.CIT (A) OUGHT TO HAVE CONSIDERED FACTS OF THE PRESENT CASE AND DIFFERENTIATE WITH THE FACTS THAT ARE DEALT WITH IN - THE ITAT ORDER OF THE PREVIOUS YEARS AS TO THE PRESENT YEAR FACTS ARE DISTINGUISHABLE FROM PREVIOUS YEARS. 8. THE CASE LAW S ON WHICH THE LD. COMMISSIONER OF INCOME TAX (APPELLANT) RELIED UPON FOR DISMISSING THE APPEAL ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT AND ARE DISTINGUISHABLE AND, THUS, THE DISMISSAL OF APPEAL BY THE LD. CIT (A) IS BAD - IN - LAW. 9. THE LD CIT (A) ERRED IN UPHOLDING THE ADDITIONS OF RS.18,76,42,239/ - BY DISALLOWING THE CLAIM TOWARDS CANCELLATION AND PRICE REVISION WITHOUT APPRECIATING THE FACT THAT, THE ASSESSEE IS ALSO ENGAGED INTO BUSINESS OF CONSTRUCTIONS. 10.THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT COMPANY DIDN'T FULFILL THE CONDITIONS OF REVISED AS - 7 FOR RECOGNIZING THE REVENUE, HENCE SUCH ADVANCES HAVE BEEN CORRECTLY WRITTEN OFF AGAINST THE WORK IN PROGRESS . 11.THE LD. CIT (A) OUGHT TO HA VE CONSIDERED THE FACT THAT, THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS' IS TO BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY ASSESSEE SUBJECTED TO THE PROVISIONS OF SUB - SEC. (2) O F SEC. 11 ITA NO S . 1125 TO 1128/HYD/2018 145 OF THE ACT. THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 7. THE ASSESSEE'S SECOND TO FIFTH SUBSTANTIVE GROUNDS RAISE THE TWIN ISSUES OF LEASE RENTAL INCOME OF RS.1,68,96,951 AND MISCELLANEOUS INCOME OF RS.7,67,097 WHICH H AD NOT BEEN OFFERED TO TAX SINCE REDUCED FROM EXPENDITURE DURING CONSTRUCTION PERIOD PENDING ALLOCATION. 8. LEARNED AUTHORIZED REPRESENTATIVE IS FAIR ENOUGH IN NOT PRESSING FOR ASSESSEE'S FOURTH SUBSTANTIVE GROUND. REJECTED ACCORDINGLY. 9. WE PROCEED TO DEAL WITH THE ASSESSEE'S INSTANT TWIN SUBSTANTIVE ISSUES . ITS LEASE RENTAL INCOME ADMITTEDLY HAS BEEN DERIVED FROM INCUBATION BUILDING. ITS CASE ALL ALONG HA S BEEN THAT IT HAD INTER ALIA CONSTRUCTED A STRUCTURE INCUBATION BUILDING WHEREIN THE CLIENTS WOULD BE PUT IN THERE TILL THE MAIN BUILDING S COMPLETION AS A BUSINESS STRATEGY TO HOLD THEM BY PROVIDING TEMPORARY WORK SPACE. WE NEXT NOTE THAT THE CIT(A)S DE TAILED DISCUSSION DECLINED THE ASSESSEE'S ARGUMENT AS UNDER : 12 ITA NO S . 1125 TO 1128/HYD/2018 -- SPACE LEFT INTENTIONALLY 13 ITA NO S . 1125 TO 1128/HYD/2018 14 ITA NO S . 1125 TO 1128/HYD/2018 15 ITA NO S . 1125 TO 1128/HYD/2018 16 ITA NO S . 1125 TO 1128/HYD/2018 17 ITA NO S . 1125 TO 1128/HYD/2018 D ECIDED IN THE HONBLE ITAT ORDER IN THE APPELLANTS OWN CASE. THEREFORE, NO REFERENCE IS REQUIRED IN THIS REGARD. HENCE, THE ADDITION MADE CONFIRMED. THE ASSESSEE'S CASE IN TUNE WITH PLEADINGS BEFORE US IS THAT THE IMPUGNED LEASE RENTAL INCOME OUGHT TO BE ASSESSED 18 ITA NO S . 1125 TO 1128/HYD/2018 UNDER THE BUSINESS HEAD SINCE DERIVED FROM TEMPORARY WORK PLACE AND THEREFORE , IT IS ONLY INCIDENTAL TO THE MAIN B USINESS ACTIVITY. LEARNED CIT - DR PLEADED THAT THE CIT(A) HAS RIGHTLY FOLLOWED THE DECISION OF TUTICORIN ALKALIS AND CHEMICAL FERTILISERS (SUPRA) WHIL ST UPHOLDING THE ASSESSING OFFICERS IMPUGNED ACTION. WE FIND IN THIS FACTUAL BACKDROP THAT EARLIER CO - OR DINATE BENCHS COMMON ORDER (SUPRA) IN R EVENUES APPEAL 507/HYD/2018 FOR ASSESSMENT YEAR 2007 - 08 HA D DIRECTED THE ASSESSING OFFICER TO SET OFF THE ASSESSEE'S IDENTICAL INCOME DERIVED FROM OTHER SOURCES AGAINST THE CORRESPONDING EXPENDITURE AS WELL. NEITH ER THE ASSESSING OFFICER NOR THE CIT(A) TAK E INTO ACCOUNT THE SAME IN THE IMPUGNED ASSESSMENT YEAR AS IS THE ADMITTED FACTUAL POSITION BEFORE US. WE THEREFORE ADOPT JUDICIAL CONSISTENCY TO REJECT ASSESSEE'S ARGUMENT S SEEKING TO TREAT THE IMPUGNED TWIN LEA SE RENTAL AND RENTAL INCOME I S BUSINESS INCOME. ITS SECOND TO FIFTH AND EIGHTH SUBSTANTIVE GROUNDS ARE THEREFORE RESTORED TO THE ASSESSING OFFICER TO BE SET OFF THESE AGAINST THE CORRESPONDING EXPENDITURE AS PER LAW. THE ASSESSEE SHALL PRODUCE ON RECORD ALL THE CORRESPONDING 19 ITA NO S . 1125 TO 1128/HYD/2018 DETAILS BEFORE THE ASSESSING OFFICER. THESE SECOND , THIRD, FIFTH TO 8 TH SUBSTANTIVE GROUNDS ARE PARTLY ACCEPTED FOR STATISTICAL PURPOSES. ORDERED ACCORDINGLY. 10. THIS LEA VES US WITH THE ASSESSEE'S 9 TH TO 11 TH SUBSTANTIVE GROUNDS SEEKING TO DELETE THE DISALLOWANCE OF RS.18,76,42,239 TOWARDS CANCELLATION AND PRICE REVISION. THE CIT(A)S DETAILED DISCUSSION AFFIRMING THE IMPUGNED DISALLOWANCE READS AS UNDER : 20 ITA NO S . 1125 TO 1128/HYD/2018 21 ITA NO S . 1125 TO 1128/HYD/2018 11. THERE IS HARDLY ANY DISPUTE THAT T HE LEARNED LOWER AUTHORITIES; AND MORE PARTICULARLY THE ASSESSING OFFICER, QUOTE ACCOUNTING STANDARD AS - 7 AS APPLICABLE ONLY IN CASE OF CONTRACTOR RATHER THAN BUILDER AS WELL. IT IS CLEAR THAT THERE IS NO ISSUE ABOUT THE GENUINENESS OF THE ASSESSEES PR ICE REVISION OR CANCELLATION CLAIM; AS THE CASE MAY BE. THE CLINCHING FACT THAT APPEARS TO HAVE FO RMED THE BASIS OF THE ASSESSEES IMPUGNED CLAIM(SUPRA)) IS A L IS IN THE ANDHRA PRADESH STATE W AKF TRIBUNAL AT HYDERABAD INSTITUTED BY THE DARGA HAZA RAT HUSSAIN SHAHWALI AGAINST 17 DEFENDANTS /RESPONDENTS WHEREIN TH IS TAXPAYERS HA D BEEN IMPLEADED AT SL.NO.5. THE ABOVE STATED PLAINTIFF HAS SOUGHT FOR INJUNCTION RELIEF AGAINST T HIS ASSESSEE AS WELL AS ALL OTHER RESPONDENTS THEREBY CLAIMING THAT THE LAND IN ISSUE IS W AKF PROPERTY ONLY. A ND THAT THESE DEFENDANTS NEVER ENJOY ED 22 ITA NO S . 1125 TO 1128/HYD/2018 ANY TITLE THEREUPON SO AS TO DERIVE REAL ESTATE DEVELOPMENT ACTIVITY. 12. IT IS EVIDENT FROM A PERUSAL O F THE INSTANT CASE FILE THAT THE LEARNED WAKF T RIBUNAL HAD PASSED A STATUS QUO ORDER DT.14. 0 2.201 1 RELEVANT TO THE IMPUGNED ASSESSMENT YEAR ONLY . AND THAT THE SAID PROCEEDINGS ARE STATED TO HAVE BEEN PENDING ALL ALONG (PAGES 70 TO 86 IN THE PAPER BOOK). L EARNED COUNSEL HAS QUOTED ACCOUNTING STANDARD AS - 9 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA REGARDING THE ISSUE OF REVENUE RECOGNITION. HIS VEHEMENT CONTENTION IN LIGHT OF THE FOREGOING ACCOUNT STANDARD AS - 9 IS THAT THE ABOVE STATED WA QF PROCEEDINGS COMPELLED THIS ASSESSEE TO RE DUCE/REVIVE THE REAL ESTATE PROJECT PRICES IN ISSUE. WE FIND NO FORCE IN THE INSTANT ARGUMENT AND MADE IT CLEAR THAT AS - 9 IS APPLICABLE IN THE PRESCRIBED ACTIVITIES OF SALE OF GOODS, RENDERING OF SERVICES AND THE USE BY OTHERS OF ENTERPRISE YIELDING INTEREST, ROYALTY AND DIVIDEND ONLY. WE THUS ADOPT STRICTER INTERPRETATION AND REJECT THE ASSESSEE'S INSTANT ARGUMENT. THE FACT HOWEVER REMAINS THAT IT CAN BE SUFFICIENTLY PRESUME D BY VIRTUE OF LEARNED 23 ITA NO S . 1125 TO 1128/HYD/2018 WAQF TRI BUNALS FOREGOING STATUS QUO ORDER QUA THAT THE ASSESSEE'S PROJECT LAND S (SUPRA) THAT THE LATTER HAD NO OPTION BUT TO OPT FOR DOWNWARD REVISION / CANCELLATION ONLY IN ORDER TO AVOID EXODUS OF ITS CUSTOMERS. WE WISH TO EMPHASISE THAT THE R EVENUE IS FAIR ENOUGH IN NOT HAVING DISPUTED THE ASSESSEE'S CLAIM IN PRINCIPLE. OR THAT THE SAME CONTAIN ED ANY ON MONEY ELEMENT , AS WELL . FACED WITH THIS SITUATION, WE FIND THAT HON'BLE APEX COURT S MUCH A CELEBRATED DECISION I.E. CHAINRUP SAMPATHRAM VS. CIT (1953) 24 ITR 481 (SC) HOLD THAT ANTICIPATED BUSINESS LOSSES COULD BE BOOKED AT THE FIRST REASONABLE PROBABILITY AS UNDER : WHILE ANTICIPATED LOSS IS THUS TAKEN INTO ACCOUNT, ANTICIPATED PROFIT IN THE SHAPE OF APPRECIATED VALUE OF THE CLOSING STOCK IS NOT BROUGHT INTO THE ACCOUNT AS NO PRUDENT HOLDER WOULD CARE TO SHOW INCREASED PROFIT BEFORE ITS ACTUAL REALIZATION LEGISLATIVE ENACTMENT. THEIR LORDSHIP HOLD IN VERY MUCH UNAMBIGUOUS TERMS THAT PRINCIPLES OF CONSERVATISM AND CONSIDERATION S OF PRUDENCE I N ACCO UNTING TREATMENT REQUIRE THAT NO ANTICIPATED PROFITS ARE TO BE TREATED AS INCOME BEFORE REALIZATION, AN ANTICIPATED 24 ITA NO S . 1125 TO 1128/HYD/2018 LOSS OUGHT TO BE DED UCTED AT THE FIRST SIGN OF PROBABILITY. WE THUS REJECT THE LEARNED CIT - DRS ARGUMENT SUPPORTING THE LOWER AUTHORITIES IMPUGNED STAND IN PRINCIPLE. WE FURTHER CONCLUDE THAT SINCE THERE IS NO CLARITY EITHER IN THE ASSESSMENT ORDER OR IN THE LOWER APPELLATE DISCUSSION AS TO WHETHER THE FOREGOING W AKF LITIGATION INVOLVES THE ASSESSEES PROJECT LAND ( S ) OR NOT, THIS RECONCILIATION ASPECT DESERVES TO BE RESTORED BACK TO THE ASSESSING OFFICER FOR HIS NECESSARY FACTUAL VERIFICATION. ORDERED ACCORDINGLY. NEEDFUL SHALL BE DONE WITHIN THREE EFFECTIVE OPPORTUNITIES OF HEARING BEFORE THE ASSESSING OFFICER. THIS ASSESSEE'S 9 TO 11 SUBSTANTIVE GROUNDS ARE ALLOWED THEREFORE . THIS ITA 1126/HYD/2018 IS PARTLY ALLOWED IN FOREGOING TERMS . 1 3 . WE NEXT ADVERT TO THE REMAINING TWIN ASSESSMENT YEARS 2012 - 13 AND 2013 - 14 INVOLVING ASSESSEE'S APPEALS ITA 1127 & 1128/HYD/2018. THE ABOVE FORM ER APPEALS RAIS E NINE SUBSTANTIVE GROUNDS WHICH ARE VERY MUCH IDENTICAL TO FORMER EIGHT SUBSTANTIVE GROUNDS IN ASSESSMENT YEAR 2011 - 12 S IN APPEAL 1126/HYD/2018 I.E. LEASE RENTAL 25 ITA NO S . 1125 TO 1128/HYD/2018 INCOME AND MISCELLANEOUS HEAD (SUPRA). WE THEREFORE ACCEPT THE SAME FOR STAT ISTICAL PURPOSES IN THE VERY TERMS. THE ASSESSING OFFICER SHALL FINALISE HIS FACTUAL VERIFICATION IN LIGHT OF OUR DIRECTIONS IN A.Y. 2011 - 12. THIS APPEAL 1127/HYD/2018 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 1 4 . COMING TO ASSESSMENT YEAR 2013 - 14 IN ITA 1128/HYD/2018, THE ASSESSEES FIRST AND FOREMOST SUBSTANTIVE GROUND SEEKS TO REVERSE INTEREST DISALLOWANCE INCURRED QUA SEZ PROPERTY UNDER CONSIDERATION AMOUNTING TO RS.11,81,00,000. THE CIT(A)S DETAILED DISCUSSION AFFIRMING THE IMPUGNED DISAL LOWANCE READS AS UNDER : -- SPACE LEFT INTENTIONALLY -- 26 ITA NO S . 1125 TO 1128/HYD/2018 27 ITA NO S . 1125 TO 1128/HYD/2018 28 ITA NO S . 1125 TO 1128/HYD/2018 1 5 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL PLEADINGS AGAINST AND IN SUPPORT OF THE IMPUGNED DISALLOWANCE. THE ASSESSEES ONLY CASE IS QUOTES ACCOUNT ING STANDARD AS - 16 ISSUED BY THE INSTITUTE OF 29 ITA NO S . 1125 TO 1128/HYD/2018 CHARTERED ACCOUNTS OF INDIA. THERE IS NO DENIAL OF THE FACT THAT BOTH THE LOWER AUTHORITIES HOLD THE IMPUGNED INTEREST AS PERTAINING TO THE RELEVANT FOURTH QUARTER ONLY WHE REIN THERE WA S NO ALLEGED ACTIVE DEVELOPMENT AS PER THE ASSESSEE'S STAND. THE FACT ALSO REMAINS THAT THE LEARNED LOWER AUTHORITIES HAVE NOT UTTERED EVEN A SLIGHTEST REASON ABOUT THE FOREGOING WAKF LITIGATION S STATUS QUO ORDER (SUPRA) CONSTRAINING THE ASSESSEE TO SUSPEND THE REAL ES TATE PROJECT DEVELOPMENT ACTIVITY. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY CONTENDED BEFORE US THAT IT W AS PENDENCY OF THE WAKF PROCEEDINGS AS WELL AS STATUS QUO ORDER (SUPRA) WHICH PRIMARILY FORMED THE MAIN REASON OF SUSPENSION OF THE CONSTRUCTION ACTIVITY. BE THAT AS IT MAY, WE ARE OF THE OPINION THAT THE FOREGOING AS - 16 ITSELF FORMED SUFFICIENT REASON TO CLAIM ITS IN TEREST EXPENDITURE NOT UNDER CAPITAL HEAD ON ACCOUNT OF SUSPENSION OF THE CONSTRUCTION ACTIVITY. WE THUS ACCEPT ASSESSEE'S INSTA NT FORMER SUBST ANTIVE GROUND. 1 6 . LASTLY COMES THE SECOND ISSUE OF LEASE RENTAL INCOME AMOUNTING TO RS.1,03,34,000 DERIVED FROM INCUBATION 30 ITA NO S . 1125 TO 1128/HYD/2018 BUILDING STAND RESTORED BACK TO THE ASSESSING OFFICER FOR HIS AFRESH COMPUTATION AFTER SET OFF THE CORRESPONDING EXPENDITURE IN ASSESSMENT YEARS 2011 - 12 AND 2012 - 13 (SUPRA) . WE ADOPT VERY COURSE OF ACTION HEREIN AS WELL IN ABSENCE OF ANY DISTINCTION OF FACTS OR LAW. ORDERED ACCORDINGLY. THIS LAST APPEAL ITA 1128/HYD/2018 IS PARTLY ACCEPTED FOR STATISTICAL PURPOSES. NO OTHER GROUND HAS BEEN PRESSED BEFORE US. 1 7 . WE LASTLY ACKNOWLEDGE THAT ALTHOUGH THE INSTANT APPEALS ARE BEING DECIDED AFTER A PERIOD OF 90 DAYS FROM THE DATE OF HEARING AS PER RULE 34(5) OF THE IT(AT) RULES 1963, THE SAME HOWEVER, DOES NOT APPLY IN THE COVID LOCKDOWN SITUATION AS PER HON'BLE APEX COURT'S RECENT DIRECTIONS DATED 27 - 04 - 2021 IN M.A.NO.665/2021 IN SM(W)C NO.3/2020 'IN RE COGNIZANCE FOR EXTENSION OF LIMITATION' MAKING IT CLEAR THAT IN SUCH CASES WHERE THE LIMITATION PERIOD (INCLU DING THAT PRESCRIBED FOR INSTITUTION AS WELL AS TERMINATION) SHALL STAND EXCLUDED FROM 14TH OF MARCH, 2021 TILL FURTHER ORDERS. 31 ITA NO S . 1125 TO 1128/HYD/2018 1 8 . TO SUM UP, THE ASSESSEE'S APPEAL ITA NO.1125/HYD/2018 IS ALLOWED & ITA NOS.1126 TO 1128/HYD/2018 ARE PART LY ALLOWED FOR STATISTICAL PURPOSES. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH SEPT. , 2021. SD/ - SD/ - (L .P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 07. 09 .2021. * REDDY GP COPY TO : 1. M/S. LANCO HILLS TECHNOLOGY PARK PVT. LTD., LANCO HOUSE, PLOT NO.4, SOFTWARE LAYOUT (UNITS), HITECH CITY, MADHAPUR, HYDERABAD. 2. ITO, WARD 16(1), HYDERABAD. DCIT, CIRCLE 16(1), HYDERABAD. 3. PR. C I T - 4 , HYDERABAD. 4. CIT(APPEALS) - 4, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.