Assistant Commissioner of Income Tax Circle-1(2)(2), Bangalore V. M/s The Senate , Bangalore

ITA 162/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7077 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI JASON P BOAZ , ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER I.T . A. NO. 162 /BANG/20 17 (ASSESSMENT YEAR : 20 10 - 11 ) ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(2)(2), BANGA LORE. . APPELLANT. VS. M/S. THE SENATE, NO.73/1, 5THFLOOR, SHRIFF CENTRE, ST. MARK S ROAD, BANGALORE - 560 001 .. RESPONDENT. APPELLANT B Y : SHRI B.R. RAMESH, JCIT (D.R) R E SPONDENT BY : SHRI SANDEEP C, C A DATE OF H EARING : 30.11.2017. DATE OF P RONOUNCEMENT : 6 .12 .201 7 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , BANGALORE DT.8.9.2016 FOR THE ASSESSMENT YEAR 20 10 - 11. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER : - 2 IT A NO. 162/ BANG/201 7 THE ASSESSEE, A FIRM ENGAGED IN PROPERTY DEVELOPMENT, CIVIL CONSTRUCTIONS AND OTHER ANCILLARY ACTIVITIES INCLUDING RENTING OF BUILDING, FILED ITS RETURN FOR ASSESSMENT YEAR 2010 - 11 ON 31.10.2011 DECLARING TOTAL INCOME OF RS.5,06,30,191. THE CASE WAS TAKEN UP FOR SCRUTINY. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 36(1)(III) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') OF AN AMOUNT OF RS.1,99,42,461 ON ACCOUNT OF INTERE ST PAID ON BORROWINGS. THE ASSESSING OFFICER DISALLOWED THE ASSESSEE'S CLAIM AS A COLOURABLE DEVICE; OBSERVING THAT THE ABOVE DISALLOWANCE WAS MADE, EVEN THOUGH THE ASSESSEE'S CLAIM WAS ALLOWED BY THE ITAT, BANGALORE BENCH S ORDER DT.29.8.2008 FOR ASSESS MENT YEARS 2001 - 02 & 2002 - 03, SINCE THE ISSUE HAD NOT ATTAINED FINALITY AS THE DEPARTMENT HAD NOT ACCEPTED THE TRIBUNAL ORDER AND WAS IN FURTHER APPEAL AGAINST THE SAME. ON APPEAL, THE LEARNED CIT (APPEALS) VIDE IMPUGNED ORDER DT.8.9.2016 ALLOWED THE ASSE SSEE'S CLAIM FOR DEDUCTION OF INTEREST ON BORROWINGS UNDER SECTION 36(1)(III) OF THE ACT FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ITS ORDER IN ITA NO.1481/BANG/2013 DT.18.3.2016 FOR ASSESSMENT YEAR 2009 - 10 AND EARLIER ASSESSMENT YEARS IN THE ASSESSEE'S OWN CASE. 3.1 AGGRIEVED BY THE ORDER OF CIT (APPEALS) DT.8.9.2016 FOR ASSESSMENT YEAR 2010 - 11, REVENUE HAS FILED THIS APPEAL, WHEREIN IT HAS RAI SED THE FOLLOWING GROUNDS : - 3 IT A NO. 162/ BANG/201 7 3.2.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED WITH RESPECT TO THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 36(1)(III) OF THE ACT IN RESPECT OF PAYMENT OF RS.1,99,42,461 ON ACCOUNT OF INTEREST ON BO RROWINGS. WE FIND THAT THE AFORESAID ISSUE HAS BEEN CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001 - 02 VIDE ORDER IN ITA NO.1202 & 1203/BANG/2007 DT.29.8.2008; FOR ASSESSMENT YEAR 2002 - 03 IN ITA NO.538/BANG/2011; FOR ASSESSMENT YEAR 2005 - 06 IN ITA NO.587/BANG/2011 DT.10.1.2014 AND FOR ASSESSMENT YEAR 2009 - 10 IN ORDER IN ITA NO.1481/BANG/2013 DT.18.3.2016. I N ITS ORDER FOR ASSESSMENT YEAR 2009 - 10 IN ASSESSEE'S OWN CASE (SUPRA), THE CO - ORDINATE BENCH OF THIS TRIBUNAL AT PARA 12 THEREOF ALLOWED THE ASSESSEE'S CLAIM HOLDING AS UNDER : 4 IT A NO. 162/ BANG/201 7 12. FOR THE ASSESSMENT YEAR 2009 - 10 (ITA NO.1481/BANG/2013), THE ONLY ISSUE INVOLVED IS DISALLOWANCE OF INTEREST ON L OANS BORROWED FROM AMARNATH CO - OP. BANK AND JAMMU - KASHMIR BANK. THE ADMITTED FACTS ON THE ISSUE ARE THAT THIS LOAN PROCEEDS WERE UTILIZED ONLY FOR THE PURPOSE OF REPAYING THE EARLIER LOANS BORROWED FROM INDIAN BANK ETC., IN THE EARLIER ASSESSMENT PROCEEDIN GS, INTEREST ON SUCH LOANS WAS DISALLOWED BY AO ON THE GROUND THAT THE LOANS WERE NOT UTILIZED FOR BUSINESS PURPOSE. ON FURTHER APPEAL BEFORE THE LD.CIT(A), THE SAME WAS CONFIRMED. HOWEVER, THE HON BLE TRIBUNAL FOR THE ASSESSMENT YEAR 2001 - 02 AND 2002 - 03 I N ITA NOS.1202 & 1203/BANG/2007 DATED 29/8/2008, ITA NOS.538/BANG/2011 FOR ASSESSMENT YEAR 2002 - 03 AND ITA NO.587/BANG/2011 FOR ASSESSMENT YEAR 2005 - 06 DATED 10/1/2014 HELD THAT THE LOAN FUNDS WERE UTILIZED ONLY FOR BUSINESS PURPOSE AND THEREFORE, DIRECTED THE AO TO ALLOW INTEREST. SINCE DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, FRESH LOANS WERE ONLY UTILIZED FOR THE PURPOSE OF REPAYING OLD LOANS, THE INTEREST ON NEW LOANS SHOULD BE ALLOWED AS DEDUCTION AS USED ONLY FOR BUSIN ESS PURPOSE FOLLOWING THE EARLIER ORDERS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL. HENCE, GROUNDS OF APPEAL FILED FOR ASSESSMENT YEAR 2009 - 10 ARE ALLOWED. 3.2.2 RESPECTFULLY FOLLOWING THE DECISIONS OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSES SEE'S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 IN ITA NO.1481/BANG/2013 DT.18.3.2016 AND EARLIER ASSESSMENT YEARS CITED SUPRA, WE UPHOLD THE DECISION OF THE LEARNED CIT (APPEALS) IN THE IMPUGNED ORDER, ALLOWING THE ASSESSEE'S CLAIM FOR DEDUCTION ON ACCOUNT OF PAYMENT OF INTEREST ON BORROWINGS UNDER SECTION 36(1)(III) OF THE ACT. CONSEQUENTLY, THE GROUNDS AT S.NOS.1 TO 4 (SUPRA) RAISED BY REVENUE ARE DISMISSED. 4. IN THE RESULT, THE REVENUE S APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS DISMISSED. ORDE R PRONOUNCED IN THE OPEN COURT ON THE 6TH DAY OF DEC. 201 7 . SD/ - ( LALIET KUMAR ) JUDICIAL MEMBER SD/ - ( JASON P BOAZ ) ACCOUNTANT MEMBE R BANGALORE, DT. 6 .12.2017. *REDDY GP