ITO, Pune V. M/S Kumar Builders Consortium, Pune

ITA 1128/PUN/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2006 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Capital asset; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S.PANNU, ACCOUNTANT MEMBER. ITA.NO.1128 & 2345/PN/2012 (ASSTT. YEAR : 2008-09 & 2009-10) ITO, WARD-4(5), PUNE. .. APPELLANT VS. KUMAR BUILDERS CONSORTIUM, 2 ND FLOOR, KUMAR CAPITAL, 2413, EAST STREET, PUNE. .. RESPONDENT PAN: AAHFK7992A ASSESSEE BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI S.K.SINGH DATE OF HEARING : 27.02.2013 DATE OF PRONOUNCEMENT : 22.03.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THESE APPEALS HAS BEEN FILED BY THE REVENUE AGAINS T THE ORDER OF THE CIT(A), ON SIMILAR ISSUES. SO THEY ARE BEIN G DISPOSED OFF BY A COMMON ORDER. 2. IN ITA.NO.1128/PN/2012, THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANC ES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSL Y ERRED IN ALLOWING THE ASSESSEE'S APPEAL INSTEAD OF CONFIRMING THE ASSESSING OFFICER'S ORDER. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSL Y ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80- IB OF THE INCOME-TAX ACT, 1961 IN RESPECT OF ITS PROFIT FROM THE 'KUMAR SANSAR' PROJECT WITHOUT APPRECIATING THAT TH E SAID PROJECT IS NOT AN INDEPENDENT HOUSING PROJECT AND INSTEAD I S A MERE EXTENSION/REVISION OF THE 'KUMAR SURAKSHA' PROJECT WHICH HAD BEEN APPROVED PRIOR TO 31.03.2004. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSS LY ERRED IN ACCEPTING THE ASSESSEE'S CLAIM TO THE EFFECT THAT T HE KUMAR SANSAR PROJECT IS A SEPARATE HOUSING PROJECT ON THE IRRELEVANT 2 DIFFERENCE BETWEEN LAYOUT PLAN APPROVAL AND BUILDIN G PLAN APPROVAL AND IN FAILING TO APPRECIATE THAT THE COMMENCEMENT CERTIFICATE DATED 09.06.2006 WAS CATEGORICALLY A REVISED CERTIFICATE, I.E. ON REVISION OF THE EARLIER CERTIFIC ATE DATED 19.11.2003 WHICH WAS IN RESPECT OF 'KUMAR SURAKSHA'. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE TH AT EVEN IF THE 'KUMAR SANSAR' PROJECT IS ASSUMED, WITH OUT ACCEPTING, TO BE AN INDEPENDENT HOUSING PROJECT IT SHOULD HAVE BEEN COMPLETED BY 31.03.2008 IN VIEW OF THE COMMENC EMENT CERTIFICATE DATED 19.11.2003 AND AS THE ASSESSEE HA D NOT BEEN ABLE TO COMPLETE THE 'KUMAR SANSAR 1 PROJECT BY 31.03.2008, IT WAS NOT ENTITLED TO DEDUCTION U/S. 80-16(10) IN RES PECT THEREOF. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSS LY ERRED IN FAILING TO APPRECIATE THAT EVEN THOUGH THE ORIGI NAL BUILDING PLAN HAD 8 BUILDING, THE SAME HAD BEEN BIFURCATED I NTO TWO SEPARATE PROJECTS ONLY WITH A VIEW TO UNDULY SECURING EXTENSION OF TIME BEYOND 31.03.2008 SO AS TO AVAIL DEDUCTION U/S. 80- 16(10), WHICH AMOUNTS TO DEFEATING THE VERY PURPOSE OF LAW. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GR OSSLY ERRED IN ALLOWING THE CLAIM OF EXPENDITURE OF 27,85,443/- ON ACCOUNT OF REVERSAL OF INTEREST RECEIVABLE WITHOUT APPRECIATING THAT NO SUCH EXPENDITURE WAS ACTUALLY INCURRED BY T HE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSL Y ERRED IN FAILING TO APPRECIATE THAT NOT ONLY THAT THE SAI D CLAIM WAS NOT ADMISSIBLE U/S 36(1)(VII) IN AS MUCH AS THE IMPUGNE D INTEREST WAS NOT IN THE NATURE OF INCOME FROM 'BUSINESS' AND THE ASSESSEE ITSELF HAD ADMITTED THE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES', BUT ALSO THAT THE ASSESSEE HAD LEGAL RECO URSE AVAILABLE; AND, IN THE CIRCUMSTANCES, THE IMPUGNED INTEREST CO ULD BY NO MEAN BE TREATED AS NON-RECOVERABLE. 9. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE GROUNDS NOS.1 TO 6 ARE IDENTICAL FOR A.YS. 2 008-09 AND 2009-10. SIMILAR ISSUE HAS BEEN DECIDED BY THIS BE NCH IN FAVOUR OF ASSESSEE IN REVENUES APPEAL PERTAINING TO THE SAME ASSESSEE FOR A.Y. 2007-08 IN ITA.NO.819/PN/2011, WHEREIN IT HAS BEEN HELD AS UNDER: 10. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFICER HAS D ISALLOWED THE CLAIM OF THE ASSESSEE U/S.80IB(10) OF THE ACT W ITH REGARD TO ITS PROJECT KUMAR SANSAR WHICH WAS COMMENCED VID E COMPLETION CERTIFICATE DATED 09.06.2006. HE OBSERV ED THAT WORD REVISED WAS MENTIONED ON TOP OF THIS COMPLET ION CERTIFICATE. THUS IT WAS A REVISED COMPLETION CERT IFICATE FOR ENTIRE PROJECT. HE FURTHER OBSERVED THAT KUMAR SAN SAR PROJECT 3 HAD ONLY THREE BUILDINGS G, H & I WHILE COMMENCEMEN T CERTIFICATE DATED 09.06.2006 MENTIONED BUILDINGS A TO I, I.E., A, B, C, D & E WERE ALSO SHOWN. THE KUMAR SURAKSHA WAS DEVELOPED BY KUMAR URBAN DEVELOPMENT LTD., WHICH WA S EARLIER KNOWN AS KUMAR HOUSING & LAND DEVELOPMENT C O. ACCORDING TO ASSESSING OFFICER, IT WAS SAME PROJECT WHICH WAS EXTENDED AND ASSESSEE HAS BIFURCATED THE SAME AS TWO PROJECTS. AS DISCUSSED ABOVE, ASSESSEE HAS MADE DE TAILED CLARIFICATION WITH REGARD TO ITS CLAIM AS DISCUSSED ABOVE. THE ASSESSEE VIDE ITS LETTER DATED 26.07.2008 BEFORE TH E CIT(A) CLEARLY MENTIONED THAT ACTUALLY THE ASSESSEE FIRM C AME INTO EXISTENCE VIDE PARTNERSHIP DEED DATED 20.09.2005, I .E, MUCH AFTER THE COMMENCEMENT OF KUMAR SURAKSHA PROJECT BY KUMAR HOUSING & LAND DEVELOPMENT CO. IT WAS THE ST AND OF THE ASSESSEE THAT KUMAR SURAKSHA PROJECT COMMENCED VIDE COMMENCEMENT CERTIFICATE DATED 19.11.2003, THE ASSE SSEE FIRM KUMAR BUILDERS CONSORTIUM WAS NOT IN EXISTENCE AT T HAT RELEVANT POINT OF TIME. ACTUALLY THE LAND OF THIS KUMAR SANSAR PROJECT OF ASSESSEE WAS TRANSFERRED BY KUMAR HOUSIN G & LAND DEVELOPMENT CO., TO THE ASSESSEE FIRM THROUGH A REG ISTERED DEVELOPMENT AGREEMENT DATED 15.10.2005 AND ASSESSEE S FIRM CAME INTO EXISTENCE VIDE PARTNERSHIP DEED DATED 20. 09.2005 AND ASSESSEE FIRM OBTAINED COMMENCEMENT CERTIFICATE DATED 09.06.2006 FOR BUILDINGS G, H & I WHICH WERE NAMED AS KUMAR SANSAR. THE SAID PROJECT WAS COMPLETED VIDE COMPLETION CERTIFICATE CC NO.720 DATED 23.03.2010. THUS, KUMAR SURAKSHA AND KUMAR SANSAR PROJECTS ARE SEPARA TE AND INDEPENDENT PROJECTS HAVING DIFFERENT COMMENCEMENT AND COMPLETION CERTIFICATES, INDEPENDENT AMENITIES AND SUPPORT FUNCTIONS, INDEPENDENT APPROACH ROAD AND BOUNDARIES , BOTH ARE SEPARATED BY 20 MT. WIDE DP ROAD AND BOTH ARE H AVING DIFFERENT HOUSING SOCIETIES. THE KUMAR SANSAR PROJ ECT WAS DEVELOPED BY ASSESSEE FIRM WHICH WAS ALTOGETHER DIF FERENT LEGAL ENTITY THAN KUMAR HOUSING & LAND DEVELOPMENT CO., W HEN KUMAR SURAKSHA WAS STARTED BY KUMAR HOUSING & LAND DEVELOPMENT CO., THE ASSESSEE FIRM WAS NOT EVEN IN EXISTENCE. THE ASSESSEE HAS THUS EXPLAINED THE ABOVE DISTINCTI ON THROUGH DIFFERENT COMMENCEMENT CERTIFICATES AND LAY OUTS PL ACED IN THE PAPER BOOK WITH REGARD TO BOTH PROJECTS. BOTH THE SE PROJECTS FULFILLED ALL THE CONDITIONS OF SECTION 80IB(10) IN ITS OWN SPHERES. LAY OUT PLAN APPROVAL AND BUILDING PLAN A PPROVAL ARE TWO DIFFERENT SANCTIONS GIVEN BY CONCERNED COMPETEN T AUTHORITIES. INITIALLY LAY OUT APPROVAL WAS TAKEN BY KUMAR HOUSING & LAND DEVELOPMENT CO., WHEREIN PROPOSED G, H & I BUILDINGS WERE ALSO CONCEIVED BUT BUILDING PLAN APP ROVED FOR LATER BUILDINGS WAS NOT TAKEN BY KUMAR HOUSING & LA ND DEVELOPMENT CO., WHICH IS INDEPENDENT FROM THE FACT THAT DEVELOPMENT CHARGES PAID FOR BOTH PROJECTS ARE DIFF ERENT. THE DEVELOPMENT CHARGES FOR BUILDING PLAN APPROVAL FOR BUILDINGS G, H & I WERE IN THE NAME OF ASSESSEE IN ITS PROJEC T KUMAR SANSAR WAS PAID ON 08.06.2006 AND 14.06.2006. THE EARLIER COMPANY, KUMAR HOUSING & LAND DEVELOPMENT CO., HAD PAID 4 THE DEVELOPMENT CHARGES ONLY FOR BUILDINGS A TO E K NOWN AS KUMAR SURAKSHA AND NOT FOR BUILDING, G, H & I. VID E SEPARATE DEVELOPMENT AGREEMENT DATED 15.10.2005, TRANSFER OF LAND TOOK PLACE FROM KHLD TO ASSESSEE FIRM AT A PRICE OF 3.34 CRORES AND AS PER ACCOUNTING PRACTICE, THE EXPENSES APPORT IONABLE TO THAT PORTION OF LAND FOR DEVELOPMENT COST ETC., WER E ALSO INCLUDED IN THIS CONSIDERATION. THIS HAS BEEN APPR ECIATED IN PARAS 8 AND9 OF THE ASSESSMENT ORDER. THUS, THE DE VELOPMENT RIGHTS OF THE PORTION OF THE LAND HAS BEEN TRANSFER RED BY DULY REGISTERED DEVELOPMENT AGREEMENT DATED 15.10.2005 T O KUMAR BUILDERS CONSORTIUM, WHICH IS THE ASSESSEE FIRM, BY EARLIER COMPANY KUMAR HOUSING & LAND DEVELOPMENT COMPANY WHICH WAS HOLDING ENTIRE DEVELOPMENT RIGHTS. THUS ASSESSEE FIRM IS DIFFERENT LEGAL ENTITY THAN COMPANY KUMAR H OUSING & LAND DEVELOPMENT COMPANY AND TRANSFER OF DEVELOPMEN T RIGHTS HAVE BEEN MADE THROUGH VALID DOCUMENTATION. THOUGH IN ORIGINAL LAY OUT PLAN IN CASE OF KUMAR HOUSING & LAND DEVELOPMENT COMPANY, THE BUILDINGS G, H & I WERE ME NTIONED BUT THEY WERE NOT DEVELOPED BY SAID FIRM BUT BY THE ASSESSEE FIRM AFTER OBTAINING DUE BUILDING PLAN APPROVED FOR BUILDINGS G, H & I AND ASSESSEE HAS PAID DEVELOPMENT CHARGES FOR THE SAME. THERE IS NOTHING ON RECORD TO SUGGEST THAT E ARLIER M/S. KUMAR HOUSING & LAND DEVELOPMENT COMPANY HAS PAID DEVELOPMENT CHARGES WITH REGARD TO BUILDINGS G, H & I OF THIS KUMAR SANSAR PROJECT. KUMAR HOUSING & LAND DEVELOP MENT COMPANY HAS APPROVAL FOR BUILDINGS A, B, C, D & E U NDER THE NAME AS KUMAR SURAKSHA WHEN THE ASSESSEE WAS NOT IN EXISTENCE AT ALL BECAUSE ASSESSEE CAME INTO EXISTEN CE VIDE PARTNERSHIP DEED DATED 20.09.2005 ONLY. MERE MENTI ONING IN COMPLETION CERTIFICATE DATED 09.06.2006 AS REVISED ON TOP BY LOCAL AUTHORITY AND BUILDINGS A TO E SHOWN THEREON DOES NOT IMPLY THAT BUILDINGS G, H & I OF KUMAR SANSAR PROJE CT WERE EXTENSION OF SAME PROJECT EARLIER DEVELOPED BY KUMA R HOUSING & LAND DEVELOPMENT COMPANY. THIS MAY BE THE PROCED URE ADOPTED BY THE MUNICIPAL CORPORATION FOR SAME SURVE Y NUMBERS OR FOR AN AMALGAMATION THAT THEY SHOW THE E NTIRE LAY OUT PLAN INCLUDING EARLIER BUILDINGS VIDE LETTER DA TED 20.01.2001. THE ASSESSEE HAS MADE COMPARISON OF TH E FACTS OF ITS CASE WITH THE FACTS OF SIMILAR ISSUES WHICH CAME BEFORE ITAT, IN THE CASE OF APOORVA PROPERTIES (SUPRA) AND ALSO IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA), AS DISCUS SED ABOVE. SIMILAR VIEW HAS BEEN TAKEN BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA) AND BY ITAT PUNE BENCH IN THE CASE OF ANKIT ENTERPRISES (SUPRA). TH E RATIO OF ABOVE DECISIONS SUPPORTS THE CLAIM OF THE ASSESSEE THAT KUMAR SANSAR PROJECT DEVELOPED BY THE ASSESSEE FIRM COMPR ISES OF BUILDINGS G, H & I, WHICH ARE DIFFERENT AND DISTINC T FROM EARLIER PROJECT DEVELOPED BY DIFFERENT LEGAL ENTITY , I.E., KUMAR HOUSING & LAND DEVELOPMENT COMPANY. THUS, IT IS ABUNDANTLY CLEAR THAT ASSESSEE CAME INTO EXISTENCE ONLY ON 20.09.2005 AND DEVELOPMENT RIGHTS IN THE LAND WAS TRANSFERRED TO IT BY KUMAR HOUSING & LAND DEVELOPME NT 5 COMPANY BY VALID AGREEMENT. IT CANNOT BE SAID THAT PROJECT DEVELOPED BY THE ASSESSEE FIRM WAS EXTENSION OF EAR LIER PROJECT DEVELOPED BY KUMAR HOUSING & LAND DEVELOPMENT COMPA NY. THERE IS A VALID TRANSFER OF DEVELOPMENT RIGHTS ON A PART OF THE SAID LAND. THE PAYMENT OF DEVELOPMENT CHARGES FOR THE BUILDING FOR THE BUILDING APPROVAL WAS MADE AS CC D ATED 09.06.2006 FOR BUILDINGS G, H & I WHICH IS INDEPEND ENT PROJECT AND ENTITLED FOR DEDUCTION U/S.80IB(10). T HIS VIEW OF THE CIT(A) IS WELL FORTIFIED BY THE DECISIONS OF TH E TRIBUNAL IN THE CASES OF APOORVA PROPERTIES (SUPRA), SAROJ SALE S ORGANISATION (SUPRA), ANKIT ENTERPRISES (SUPRA) AND DECISION OF JURISDICTIONAL HIGH COURT IN VANDANA PROPERTIES (SU PRA), AS DISCUSSED ABOVE. MOREOVER, BOTH PROJECTS ARE INDEP ENDENT HAVING INDEPENDENT COMMENCEMENT AND COMPLETION CERTIFICATES, INDEPENDENT AMENITIES AND SEPARATE FU NCTIONS, INDEPENDENT APPROACH AND BOUNDARIES, BOTH ARE SEPAR ATED BY 20 MT. DP ROAD, BOTH ARE HAVING DIFFERENT HOUSING S OCIETIES AND ARE CARRIED OUT BY DIFFERENT ENTITIES. IN VIEW OF ABOVE, THE CIT(A) WAS JUSTIFIED IN GRANTING THE DEDUCTION U/S. 80IB(10) CLAIMED BY THE ASSESSEE. THIS REASONED FINDING BAS ED ON FACTS AND LAW NEEDS NO INTERFERENCE FROM OUR SIDE. WE UP HOLD THE SAME. 11. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 3.1. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONI NG WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN GRANTING THE DEDUCTION U/S.80IB(10) OF THE ACT FOR BOTH THE YEARS. WE UPHOLD THE SAME. 4. THE NEXT ISSUE, IN ITA.NO.1128/PN/2012 FOR A.Y. 2008-09, IS WITH REGARD TO ALLOWABILITY OF EXPENDITURE OF RS.27 ,85,443/- ON ACCOUNT OF REVERSAL OF INTEREST. THE ASSESSING OFF ICER DISALLOWED THE EXPENDITURE OF RS.27,85,443/- BEING REVERSAL OF INT EREST ACCOUNTED IN EARLIER YEAR. DURING THE ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ASKED FOR EXPLANATION OF THE ASSESSEE IN CL AIMING OF DEDUCTION FOR INTEREST RECEIVABLE REVERSED AND WAS ASKED TO EXPLAIN DIFFERENCE IN INTEREST AMOUNT AROSE. IT WAS ALSO A SKED AS TO HOW SAME WAS ALLOWABLE EXPENDITURE IN THE YEAR UNDER CO NSIDERATION. IN ABSENCE OF SATISFACTORY EXPLANATION ON THIS ACCO UNT, INTEREST RECEIVABLE REVERSED WAS NOT FOUND EXPENDITURE FOR T HE CURRENT YEAR AS ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCO UNTING. ACCORDINGLY, SAME WAS DISALLOWED AND ADDED TO THE T OTAL INCOME OF THE ASSESSEE. 6 4.1. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED. HAVING CO NSIDERED THE SAME, THE CIT(A) ALLOWED THE SAME. SAME HAS BEEN O PPOSED BEFORE US. 4.2. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(A) ERRED IN ALLOWING THE CLAIM OF EXPENDITURE O F RS.27,85,443/- ON ACCOUNT OF REVERSAL OF INTEREST RECEIVABLE WITHO UT APPRECIATING THAT NO SUCH EXPENDITURE WAS ACTUALLY INCURRED BY T HE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. ACCORDIN GLY THE ORDER OF THE CIT(A) ON THE ISSUE BE SET ASIDE AND THAT OF TH E ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, LD. AUTHORISED REP RESENTATIVE RELIED ON THE DECISION OF THE CIT(A) ON THE ISSUE A ND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT AN AMOUNT OF RS.27,85 ,443/- WAS DEBITED TO THE ACCOUNT FOR REVERSAL OF ERRONEOUS IN TEREST RECEIVABLE FROM M/S.KUMAR & SONS ACCOUNTED IN F.Y. 2006-07. 4.3. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD CLAIMED TO HA VE ADVANCED MONEY TO M/S.KUMAR & SONS DURING THE A.Y. 2007-08 A ND INTEREST OF RS.85,36,228/- HAD ALREADY BEEN SHOWN AS INCOME FOR A.Y. 2007-08. HOWEVER, M/S.KUMAR & SONS DID NOT ACCEPT ASSESSEES CLAIM FULLY AND RESTRICTED THE SAME TO RS.55,70,885 /- RESULTING INTO ADDITION OF RS.27,85,443/- TO THE INCOME OF THE ASS ESSEE. IN FACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION FOR INT EREST RECEIVABLE REVERSED AMOUNTING TO RS.27,85,443/-, DETAILS THERE OF WERE CALLED FOR VIDE ORDER DATED 03.12.2010, ASSESSEE HAS EXPLA INED AS UNDER: IN F.Y. 2006-07 KBC CHARGED RS.83,56,328/- TOWARDS INTEREST FROM KUMAR SONS. HOWEVER, LATER IT TURNED OUT THAT KUMAR SONS HAD PROVIDED INTEREST OF ONLY RS.55,70,8 85/-. HENCE, IN ORDER TO RECTIFY THE POSITION, KBC REVERS ED THE EXCESS INCOME OF RS.27,85,443/- THAT IT HAD BOOKED EARLIER . 7 VIDE ORDER SHEET ENTRY DATED 03.12.2010, ASSESSEE W AS AGAIN ASKED TO STATE AS TO WHY THE DIFFERENCE OF INTEREST AMOUN T AROSE AND AS TO WHY IT IS ALLOWABLE AS EXPENSE IN THE YEAR UNDER CO NSIDERATION. NO SATISFACTORY REPLY WAS RECEIVED ON BEHALF OF THE AS SESSEE. ACCORDINGLY, THE ASSESSING OFFICER HELD THAT INTERE ST RECEIVABLE REVERSED IS NOT AN EXPENDITURE OF CURRENT YEAR GOIN G BY MERCANTILE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE. HENC E, SAME WAS DISALLOWED. HOWEVER, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE BEING WRITTEN OFF AS A BAD DEBT. BUT THERE IS NOTH ING ON RECORD TO SUGGEST THAT THE AMOUNT IN QUESTION WAS A BUSINESS EXPENDITURE. SO THERE IS NO QUESTION OF ALLOWING THE SAME AS BAD DEBT OR BUSINESS LOSS. ACCORDINGLY, THE ORDER OF THE CIT(A ) ON THE ISSUE IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS REST ORED. 5. IN THE RESULT, THE APPEAL IN ITA.NO.1128/PN/2012 IS PARTLY ALLOWED AND THE APPEAL IN ITA.NO.2345/PN/2012 IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF MARCH, 2013. SD/- SD/- ( G.S.PANNU ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 22 ND MARCH, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, WARD-4(5), PUNE. 3. THE CIT(A)-II, PUNE. 4. THE CIT-II, PUNE. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.