Amsri Developers Private Limited , Secunderabad V. Dy. Commissioner of Income Tax , Central Circle-1(2), Hyderabad

ITA 1556/Hyd/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4862 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 04-12-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 16-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Proportionate interest
• Section: 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1556/HYD/2018 ASSESSMENT YEAR: 2015 - 16 M/S. AMSRI DEVELOPERS PRIVATE LIMITED, SECUNDERABAD. PAN: AAGCA 0793 F VS. DCIT, CENTRAL CIRCLE - 1(2), HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 1557/HYD/2018 ASSESSMENT YEAR: 2015 - 16 M/S. AMSRI INFRA PROJECTS PRIVATE LIMITED, SECUNDERABAD. PAN: AAGCA 0788 A VS. DCIT, CENTRAL CIRCLE - 1(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.C. DEVDAS REVENUE BY: SRI SUNKU SRINIVAS, DR DATE OF HEARING: 04/12/2019 DATE OF PRONOUNCEMENT: /0 2 /2020 ORDER PER A. MOHAN ALANKAMONY, AM.: BOTH THE CAPTIONED APPEALS ARE FILED BY THE ASSESSEES AGAINST THE ORDERS OF THE LD. CIT(A) - 11, HYDERABAD IN APPEAL NOS. 47 & 377/2017 - 18/CC - 1(2)/CIT(A) - 11/17 - 18, DATED 25/5/2018 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE A.Y. 201 5 - 16. SINCE BOTH THE ASSESSEES 2 ARE SISTER CONCERNS AND HAVE RAISED IDENTICAL GROUNDS, THE APPEALS ARE HEARD TOGETHER AND DISPOSED OF F BY THIS COMMON ORDER. 2. THE IDENTICAL GROUNDS RAISED BY THE ASSESSEES ARE EXTRACTED HEREINBELOW FOR REFERENCE: - 1. THE ORDER OF THE HONBLE CIT(A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HONBLE CIT(A) OUGHT TO HAVE DELETED THE DISALLOWANCE MADE BY THE A.O. IN RESPECT OF INTEREST CLAIM OF RS. 18,22,065/ - IN THE CASE OF AMSRI DEVELOPERS PVT LTD AND RS. 12,18,416/ - IN THE CASE OF AMSRI INFRA PROJECTS LIMITED WITHOUT RESTRICTING THE SAME TO 50%. 3. THE HONBEL CIT(A) OUGHT TO HAVE OBSERVED THAT THE A.O. ERRED IN REDUCING THE CAPITAL WORK IN PROGRESS BY RS. 18,22,065/ - IN THE CASE OF AMSRI DEVELOPERS PVT LT D AND RS. 12,18,416/ - IN THE CASE OF AMSRI INFRA PROJECTS LIMITED AND THEREFORE OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE INSTEAD OF RESTRICTING THE SAME TO 50%. 4. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT BOTH THE ASSESSEES ARE PRIVATE LIMITED COMPANIES ENGAGED IN THE BUSINESS OF CONSTRUCTION FILED THEIR RETURN OF INCOME DECLARING NIL INCOME . S UBSEQUENTLY , BOTH THE RETURN S W ERE TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED BY DISALLOWING THE CLAIM OF PROPORTIONATE INTEREST EXPENDITURE WITH RESPECT TO THE INTEREST FREE LOAN ADVANCED BY THE ASSESSEES TO THEIR RELATED CONCERNS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDI NGS, IT WAS OBSERVED BY THE LD. AO THAT BOTH THE ASSESSEES HAD ADVANCED INTEREST FREE LOANS TO THEIR SISTER CONCERNS WHEN THEY WERE INCURRING INTEREST EXPENDITURE . ON QUERY, BOTH THE ASSESSEES DID NOT FURNISH ANY DOCUMENTARY EVIDENCE TO ESTABLISH THAT THE ADVANCES MADE TO THEIR 3 SISTER CONCERNS IS IN RELATION TO THE BUSINESS OF THE ASSESSEE. IT WAS FURTHER OBSERVED THAT BOTH THE ASSESSEES HAD DEBITED THE INTEREST INCOME INCURRED BY IT TO THE WORK - IN - PROGRESS AND THEREBY CAPITALISE THE SAME WITHOUT CLAIMING IT AS DEDUCTION. THEREFORE, THE LD. AO REDUCED THE PROPORTIONATE INTEREST EXPENDITURE INCURRED WITH RESPECT TO THE INTEREST FREE LOAN ADVANCED TO THE SISTER CONCERN FROM THE WORK - IN - PROGRESS. AGGRIEVED BY THE ORDER OF THE LD. AO, BOTH THE ASSESSEES CARRIED THE MATTER BEFORE THE LD. CIT (A). 4. THE LD. CIT (A) FOLLOWING HIS EARLIER ORDER IN THE CASE OF THE ASSESSEE ON THE IDENTICAL ISSUE FOR THE AY 2007 - 08 RESTRICTED THE DISALLOW ANCE TO 50% OF THE DISALLOWANCE MADE BY THE LD.AO . NOW THE ASSESSEE IS IN APPEAL BEFORE US BY STATING THAT THE LD. CIT (A) OUGHT TO HAVE ALLOWED THE ENTIRE AMOUNT OF PROPORTIONATE INTEREST TO BE ADDED TO THE WORK - IN - PROGRESS OF THE ASSESSEE THEREBY DELETING THE DISA LLOWANCE MADE BY THE LD. AO RATHER THAN SUSTAINING 50% OF THE SAME. THE CONTENTION OF THE ASSESSEE BEFORE US WAS THAT ONCE THE LD. CIT (A) IS SATISFIED THAT THE LOAN ADVANCED TO THE SISTER CONCERNS IS TOWARDS THE BUSINESS OF THE ASSESSEE THEN NO DISALLOWA NCE CAN BE MADE. IT WAS T HEREFORE ARGUED THAT THE LD.CIT(A) HAS ERRED BY GRA N TING 50% RELIEF TO THE ASSESSEE RATHER THAN DELETING THE ENTIRE DISALLOWANCE MADE BY THE LD. AO. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD. CIT (A). 4 5. WE HAV E HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE ORDER OF THE LD. CIT (A) IT IS APPARENT THAT IN ORDER TO EXPEDITIOUSLY RESOLVE THE ISSUE AND AVOID FURTHER INVESTIGATION LEADING TO UNNECESSARY COST AND INCONVENIENCE TO BOTH THE PARTIES , THE LD. CIT (A) HAS RESTRICTED THE DISALLOWANCE AT 50% OF THAT WHAT WAS MADE BY THE LD. AO FOLLOWING THE ORDER OF THE LD. CIT (A) FOR THE AY 2007 - 08 . IT IS ALSO APPARENT THAT THE ASSESSEE HAD NOT FURNISHED ANY COGENT EVIDENCE BEFORE THE LD. AO, LD. CIT (A) AND EVEN BEFORE US AT THIS STAGE TO JUSTIFY ITS CLAIM THAT THE LOANS ADVANCED TO THE SISTER CONCERN WERE FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. IN THIS SITUATION, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER S OF TH E LD. CIT (A) ON THIS ISSUE IN THE CASE OF BOTH THE ASSESSEES. THOUGH IT WOULD HAVE BEEN APPROPRIATE FOR US TO REMIT BACK THE MATTER TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION, WE HAVE RESTRAINED FROM DOING SO BECAUSE IT WOULD RESULT IN PROTRACTED LITIGATION LEADING TO WASTE OF RESOURCES AND MAY ALSO ADVERSELY AFFECT THE ASSESSEE SINCE IT APPEARS THAT THE ASSESSEE HAS NO COGENT EVIDENCE TO SUPPORT ITS STAND , FURTHER THE REVENUE HAS ALSO NOT PREFERRED APPEAL . 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18 TH FEBR UARY, 2020. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED : 18 TH FEBRUARY , 2020 5 OKK COPY TO: - 1) M/S. AMSRI DEVELOPERS PRIVATE LIMITED (II) M/S. AMSRI INFRA PROJECTS PRIVATE LIMITED, C/O. B. NARSING RAO & CO., CHARTERED ACCOUNTANTS, PLOT NO. 554, ROAD NO.92, JUBILEE HILLS, HYDERABAD 96. 2) DCIT, CENTRAL CIRCLE - 1(2), HYDERABAD. 3) THE CIT(A) - 11, HY DERABAD. 4) THE PR. COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE