Appeal details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 83603 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 6 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-08-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
F
Next Hearing Date
06-05-2014
Assessment Year
2008-2009
Appeal Filed On
12-02-2013
Judgement Text
G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE S/SHRI N.K. BILLAIYA, AM AND DR. S.T.M. PAVA LAN, JM . . , . . . . ! ' #./ I.T.A. NO. 1223 /MUM/2013 ( / ASSESSMENT YEAR : 2008-2009 M/S MAHARASHTRA AIRPORT DEVELOPMENT COMPANY LTD., 12 TH FLOOR, WORLD TRADE CENTRE TOWER NO. 1, CUFFE PARADE, MUMBAI 400 005. / VS. DY. COMMISSIONER OF INCOME TAX- RANGE 3(2), MUMBAI. % # ./ PAN : AADCM9623M ( ' %& / APPELLANT ) .. ( '(%& / RESPONDENT ) A PPELLANT BY SHRI SALIL KAPOOR SHRI VIKAS JAN SHRI MANGESH KADAM & SHRI PRAKASH GOGATE R E SPONDENT BY : SHRI S.P. WALIMBE ) * + ,! / DATE OF HEARING : 25-8-2014 -./0 + ,! / DATE OF PRONOUNCEMENT : 27-8-2014 [ 1 / O R D E R PER N.K. BILLAIYA, A.M . : . . , THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A)- 4 DATED 21-12-2012 PERTAINING TO A.Y. 2007-08. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE LD. CIT(A) ERRED IN TREATING THE INTEREST INCOME OF RS. 6,86,16,552/- AS INCOME ITA 1223/M/13 2 FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME AN D THEREBY DENYING THE CLAIM OF DEDUCTION U/S 80-IA OF THE INCOME TAX ACT, 1961. 3. THE ASSESSEE IS ENGAGED IN INFRASTRUCTURE DEVELO PMENT AND DURING THE YEAR THE ASSESSEE WAS INVOLVED IN DEVELOPMENT OF SE Z IN NAGPUR DISTRICT BY THE TITLE MIHAN PROJECT. THE RETURN FOR THE YEAR WAS FILED BY IT ON 24-9-2008 DECLARING TOTAL INCOME AT RS. NIL. THE TOTAL INC OME FROM THE PROJECT MIHAN WAS AT RS. 53.58 CRORES AND THE SAME WAS CLAIMED AS EXEMPT U/S 80-IAB OF THE ACT. THE RETURN OF INCOME WAS SELECTED FOR SCRU TINY ASSESSMENT. STATUTORY NOTICES WERE ACCORDINGLY ISSUED AND SERVE D UPON THE ASSESSEE. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S, THE A.O. NOTICED THAT UNDER THE HEAD OTHER INCOME, THE ASSESSEE HAS INC LUDED INTEREST INCOME FROM CONTRACTORS AT RS. 2,92,88,967/- AND INTEREST INCOME FROM BANK AFTER NETTING OFF AMOUNTING TO RS. 3,93,27,585/-. THE ASS ESSEE WAS ASKED TO EXPLAIN WHY THE INTEREST INCOME HAS BEEN INCLUDED I N THE CLAIM OF DEDUCTION U/S 80-IAB OF THE ACT AND WHY THE CLAIM SHOULD NOT BE DENIED AND INTEREST INCOME BE TAXED UNDER THE HEAD INCOME FROM OTHER S OURCES. THE ASSESSEE FILED A DETAILED REPLY TO SUBSTANTIATE ITS CLAIM. T HE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. HOWEVER, THE A.O. ALLOWED THE ASSESSEE TO DEDUCT THE INTEREST EXPENSES FROM THE I NTEREST INCOME EARNED FROM FDR AND ACCORDINGLY TREATED THE INTEREST INCOM E (NET) RS. 3,93,27,585/- BEING EARNED ON FDR AND RS. 2,92,88,967/- BEING INT EREST ON ADVANCES TO THE CONTRACTORS AS INCOME FROM OTHER SOURCES AND ALLO WED THE CLAIM OF DEDUCTION U/S 80-IAB OF THE ACT ON THE BALANCE OF THE BUSINES S INCOME. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND REITER ATED ITS CLAIM. THE LD. CIT(A) WAS OF THE OPINION THAT THE A.O. HAS WRONGLY ALLOWE D THE INTEREST EXPENSES FROM THE INTEREST INCOME. THE LD. CIT(A) ACCORDINGL Y ISSUED NOTICE OF ENHANCEMENT U/S 251(2) OF THE ACT AND DIRECTED THE A.O. TO TREAT THE INTEREST FROM BANK ON FDR AT RS. 18,45,46,518/- UNDER THE HE AD INCOME FROM OTHER SOURCES. HOWEVER, AT THE SAME TIME THE LD. CIT(A) DIRECTED THE A.O. TO ALLOW ITA 1223/M/13 3 DEDUCTION FOR INTEREST PAID TO BANK ON THE BORROWIN G OF RS. 14,52,19,631/- UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION . AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STRO NGLY SUBMITTED THAT THE MONEY WHICH WAS PARKED IN FD WAS THE MONEY WHICH WA S NOT IMMEDIATELY REQUIRED FOR THE PURPOSES OF THE BUSINESS. THE FDS WERE MADE ONLY FOR SHORT PERIOD AND IT IS NOT OUT OF THE SURPLUS FUNDS BUT T HE SAME WERE PURCHASED FROM THE BORROWINGS MADE BY THE ASSESSEE. THEREFORE , THERE IS A DIRECT NEXUS BETWEEN THE BUSINESS ACTIVITIES OF THE ASSESSEE AND THE INTEREST EARNED FROM FDS. TO SUPPORT THIS CONTENTION, THE LD. COUNSEL FO R THE ASSESSEE HAS RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LOK HOLDINGS (2009) 308 ITR 356 (BOM). THE LD. COUNSEL FOR THE ASSESSEE ALSO DREW OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2005-06 AND 2007-08 AND POINTED OU T THAT THE TRIBUNAL IN ITA NO. 127/MUM/2012 AT PARA 28.1 OF ITS ORDER HAS DECIDED AN IDENTICAL ISSUE AGAINST THE ASSESSEE FOLLOWING THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE OF SHREE KRISHNA POLYSTER LTD. VS . DCIT (2005) 274 ITR 21 (BOM). HOWEVER, IT IS THE SAY OF THE LD. COUNSEL F OR THE ASSESSEE THAT THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I S NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE INASMUCH AS IN THE PRESENT CASE SURPLUS MONEY OF THE ASSESSEE HAS NOT BEEN DEPOSITED IN FDS, THEREFORE, THE DECISION IS CLEARLY DISTINGUISHABLE ON THE FACTS OF THE CASE. 5. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND ALSO PERUSED THE RELEVANT MATERIAL BROUGHT ON RECORD BEF ORE US. THE ONLY ISSUE TO BE DECIDED IS WHETHER THE FDS WAS MADE OUT OF SURPL US FUNDS OF THE ASSESSEE OR OUT OF THE BORROWINGS/ADVANCES RECEIVED BY THE A SSESSEE AND WHETHER THE DEPOSITS WERE MADE FOR A SHORT PERIOD. WE FIND THAT THIS ISSUE HAS NOT BEEN ITA 1223/M/13 4 CONSIDERED BY THE LOWER AUTHORITIES ON THE FACTS OF THE CASE. IN OUR CONSIDERED OPINION, THIS ISSUE NEEDS TO BE RE-ADJUDICATED BY T HE A.O. WE ACCORDINGLY RESTORE THIS ISSUE TO THE FILE OF THE A.O. THE A.O. IS DIRECTED TO VERIFY WHETHER THE FDS HAVE BEEN MADE OUT OF SURPLUS FUNDS OR OUT OF LOANS AND BORROWING OF THE ASSESSEE AND WHETHER THE FDS WERE FOR SHORT PERIOD OF TIME. THE ASSESSEE IS DIRECTED TO FILE NECESSARY DETAILS BEFO RE THE A.O. THE A.O. IS EXPECTED TO GIVE A FAIR AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. THE SECOND ISSUE RELATES TO THE INTEREST RECEIVE D BY THE ASSESSEE ON ADVANCES MADE BY IT TO ITS VARIOUS CONTRACTORS WHO ARE ENGAGED IN INFRASTRUCTURE WORK. WE FIND THAT AN IDENTICAL ISSU E HAS BEEN CONSIDERED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES, 283 ITR 402 WHERE THE HONBLE GUJARAT HIGH COURT HAS HELD THAT THE INTEREST RECEIVED ON DELAYED PAYMENT BY THE DEBTOR IS TO BE INCLUDED IN THE PROFIT OF THE INDUSTRIAL UNDERTAKING. IN THE CASE IN HAND, THERE IS NO DISPU TE THAT THE ASSESSEE HAS RECEIVED INTEREST FROM ADVANCES MADE BY IT TO ITS C ONTRACTORS ENGAGED IN INFRASTRUCTURE WORK, THEREFORE, THE INTEREST RECEIV ED BY THE ASSESSEE HAS TO BE CONSIDERED AS INTEREST DERIVED FROM INDUSTRIAL UNDE RTAKING ELIGIBLE FOR DEDUCTION U/S 80-IAB OF THE ACT. TO SUM UP, INTERES T AMOUNTING TO RS. 2,92,88,967/- BEING INTEREST ON ADVANCES TO CONTRAC TORS IS TO BE TAXED UNDER THE HEAD BUSINESS INCOME AND INTEREST OF RS. 3,93 ,27,585/- BEING INTEREST ON FDR HAS TO BE DECIDED AFRESH AS PER THE DIRECTIO NS GIVEN HEREINABOVE. ITA 1223/M/13 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2014. 1 + -./0 ) 2 3#4 27-8-2014 . + 5* SD/- SD/- (DR. S.T.M. PAVALAN) (N.K. BILLAIYA ) /J UDICIAL MEMBER ACCOUNTANT MEMBER ) #* MUMBAI ; 3# DATED 27-08-2014. [ .../ R.K. , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ' %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ! ) H, (' ) / THE CIT(A)- 4, MUMBAI 4. ! ) H, / CIT- 3, MUMBAI 5. KL5 ',MN , ! ' 'MN!0 , ) #* / DR, ITAT, MUMBAI G BENCH 6. 5O P* / GUARD FILE. ! ( / BY ORDER, (K, ', //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , ) #* / ITAT, MUMBAI
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