Daftari Realtors (P) Ltd., , Kolkata V. ITO, Ward - 9(1), Kolkata , Kolkata

ITA 1575/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7526 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 04-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED

Judgement Text

PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA BEFORE SH. P.M.JAGTAP, VICE PRESIDENT & SH.S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1575/KOL/2017 (ASSESSMENT YEAR-2013-14) ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30.01.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-16, KOLKATA [HEREINAFTER CIT(A)] FOR AY 2013-14. 2. THE ONLY ISSUE IS TO BE DECIDED AS TO WHETHER THE CIT(A) JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO ON ACCOUNT OF INTEREST PAID ON LOAN IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. HEARD BOTH PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE DEBITED AN AMOUNT OF RS. 98,39,938/- TOWARDS INTEREST ON UNSECURED LOAN. THE ASSESSEE HAD ADVANCED AN AMOUNT OF RS. 1,40,61,140/- TO M/S TRIARA VYAPAR PVT.LTD. THE ASSESSEE SUBMITTED THAT THE PAID AMOUNT WAS GIVEN TO SAID PARTY FOR PURCHASE OF A PLOT OF LAND AND AGAINST DEVELOPMENT THEREON VIDE MOU DATED 20.09.2010 WHEREBY IT WAS AGREED THAT THE ASSESSEE WOULD DEVELOP PROPERTY AND THE PROFIT OF DEVELOPMENT FROM SUCH PROPERTY WOULD BE SHARED BY IT. HE FOUND THE DAFTARI REALTORS (P) LTD. C/O SDP & ASSOCIATES, 46C, CHOWRINGHEE ROAD, FLAT-14G, KOLKATA- 700071. PAN-AACCD9027D VS INCOME TAX OFFICER WARD- 9(1), KOLKATA. (APPELLANT) (RESPONDENT) APPELLANT BY SH. SUBHAS AGARWAL , ADV. RESPONDENT BY SH.C.J.SINGH, JCIT, SR.DR DATE OF HEARING 20 .0 6 .2019 DATE OF PRONOUNCEMENT 2 6 .07 .2019 ITA NO.1575/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 2 SUBMISSIONS OF THE ASSESSEE THAT IT IS ENGAGED IN REAL ESTATE DEVELOPMENT IS CONTRARY TO ITS ACTUAL BUSINESS AS FOUND IN THE BOOKS OF ACCOUNTS AND FROM AUDITORS REPORT, ACCORDING TO HIM THAT THE ASSESSEE IS TRADING IN SUGAR AND GOLD. FURTHER, ON PERUSAL OF THE BOOKS OF ACCOUNTS THAT THE ASSESSEE PURCHASED TWO PIECES OF LAND IN THE EARLIER FINANCIAL YEAR AND THE SAID PIECES OF LAND WERE NOT KEPT UNDER THE HEAD OF INVENTORY / WORK IN PROGRESS NEITHER IN THE YEAR UNDER CONSIDERATION OR PRECEDING YEARS. THE AO CONSIDERING THE SAME DENIED THE CLAIM OF ALLOWANCE UNDER SECTION [HEREINAFTER U/S) 36(1)(III) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). IN CHALLENGE BEFORE THE CIT(A) IT WAS CONTENDED THAT THE ASSESSEE IS ALSO IN BUSINESS OF INVESTMENT OF MONEY AND EARNED INTEREST THEREON AND ENTITLED TO CLAIM ALLOWANCE U/S 36(1)(III) OF THE ACT AS IT IS INCURRED FOR THE PURPOSE OF ITS BUSINESS. IT IS NOTED THAT THE CIT(A) CONFIRMED THE VIEW OF AO THAT THE CLAIM OF PAYMENT OF INTEREST IS NOT ALLOWABLE AS THE PIECES OF LAND PURCHASED WERE NOT PUT TO USE. 5. BEFORE US, THE LD. AR SUBMITS THAT THE ASSESSEE IS ALSO ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND PURCHASED TWO PIECES OF LAND AND WERE NOT ABLE TO DEVELOP THE SAME AS DUE TO DISPUTE IN THE SAID LAND. THE LD. AR, FURTHER, REPORTED TO PAGE NO.-96 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS AN OBJECT IS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF MAIN OBJECTS IN THE MOU TO INVEST ANY MONEY OF THE COMPANY OUT OF THE SURPLUS FUND, NOT IMMEDIATELY REQUIRED FOR THE TIME BEING FOR ANY OF THE PURPOSES OF THE COMPANY IN SUCH MANNER AS IT THINKS FIT. THE LD. AR ARGUED WHILE THIS INCIDENTAL OBJECT FOR THE ATTAINMENT OF THE MAIN OBJECTS AND THE INTEREST PAYMENT ON LOANS IS ALLOWABLE DEDUCTION U/S 36(1)(III) OF THE ACT. TO SUPPORT HIS SUBMISSION, THE AR REFERRED TO PAGE NO.-56 OF THE PAPER BOOK TO SHOW THAT THE CONFIRMATION OF ACCOUNTS ISSUED TO THE M/S ARPIT NIRMAN PVT.LTD. TO SHOW THE CLOSING BALANCE. HE FURTHER, REFERRED TO PAGE NO.-3 AND 11 OF THE PAPER BOOK AND SUBMITTED THAT THE INTEREST RECEIVED TO AN EXTENT OF RS. 84,96,639/- ON ACCOUNT OF REVENUE OPERATION WHICH INCIDENTAL TO THE BUSINESS OF THE ASSESSEE. THE LD. AR PRAYED TO REMAND THE MATTER TO THE FILE OF THE AO FOR A LIMITED PURPOSE TO VERIFY THE MOU WHICH PLACED AT PAGE NO.- ITA NO.1575/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 3 57 OF THE PAPER BOOK FOR EXAMINATION OF WHETHER THE ASSESSEE IS ENTITLED TO CLAIM ALLOWANCE IN PURSUANCE OF THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND M/S TRIARA VYAPAR PVT.LTD. IN TERMS OF MEMORANDUM OF UNDERSTANDING. THE LD. DR DID NOT REPORT OBJECTION IN SENDING THE MATTER TO THE FILE OF AO FOR FRESH VERIFICATION LIMITED TO THE EXTENT AS INDICATED ABOVE. THEREFORE, IN OUR OPINION, TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE, THE MATTER SHALL BE REMANDED TO THE FILE OF AO FOR HIS FRESH VERIFICATION. THE AO SHALL EXAMINE THE MEMORANDUM OF UNDERSTANDING, ALONG WITH THE PROFIT AND LOSS ACCOUNTS PLACED AT PAGE NOS.-3 TO 14 AND PASS ORDER IN ACCORDANCE WITH LAW. 6. THUS, GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26.07.2019. SD/- SD/- (P.M.JAGTAP) (S.S.VISWANETHRA RAVI) VICE PRESIDENT JUDICIAL MEMBER DATE:- 26.07.2019 BIDHAN COPY FORWARDED TO: 1. APPELLANT- DAFTARI REALTORS (P) LTD., C/O SDP & ASSOCIATES, 46C, CHOWRINGHEE ROAD, FLAT-14G, KOLKATA- 700071. 2. RESPONDENT- ITO, WARD- 9(1), KOLKATA. 3. CIT-KOLKATA 4. CIT(APPEALS)-16, KOLKATA 5. DR: ITAT -KOLKATA BENCHES BY ORDER AR/H.O.O ITAT, KOLKATA