SANGHAVI LAND DEVELOPERS PVT. LTD, Mumbai V. ACIT 8 (1)(2), Mumbai

ITA 1692/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7919 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 20-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA L D
• Assessee Lawyers: SATISH MODY LD
• Keywords: Business income; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.1692/MUM/2019 ( / ASSESSMENT YEAR: 2013-14) & ./ I.T.A. NO.1693/MUM/2019 ( / ASSESSMENT YEAR: 2014-15) SANGHAVI LAND DEVELOPERS PVT. LTD. 98/2, K.R.MAHATRE MARFG REAY ROAD (W) MUMBAI 400 010 / VS. ACIT - 8(1)(2) AAYKAR BHAWAN M.K.MARG MUMBAI-400 020 !' ./ ./PAN/GIR NO. AAFCS-7731-J ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) ASSESSEE BY : SHRI SATISH MODY-LD. AR REVENUE BY : SHRI T.S. KHALSA- LD. SR.DR / DATE OF HEARING : 14/01/2021 / DATE OF PRONOUNCEMENT : 14/01/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS 2013- 14 & 2014-15 CONTEST SEPARATE ORDERS OF LD. FIRST A PPELLATE AUTHORITY. BOTH THE APPEALS ARE BEING DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. 2.1 THE APPEAL FOR AY 2013-14 CONTEST THE ACTION OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, MUMBAI ORD ER DATED 2 16/10/2018 QUA CONFIRMATION OF DISALLOWANCE U/S 14A FOR RS.31.17 LACS. THE ASSESSEE BEING RESIDENT CORPORATE ASSESSE E IS STATED TO BE ENGAGED IN CONSTRUCTION BUSINESS. 2.2 IN AN ASSESSMENT FRAMED U/S 143(3) ON 31/03/201 6, IT TRANSPIRED THAT THE ASSESSEE EARNED CERTAIN EXEMPT INCOME DURING THE YEAR. ACCORDINGLY, LD. AO, INVOKING THE PROVISI ONS OF SEC. 14A R.W.R. 8D(2), COMPUTED AGGREGATE DISALLOWANCE OF RS .31.17 LACS WHICH COMPRISED-OFF OF INTEREST DISALLOWANCE U/R 8D (2)(II) FOR RS.29.08 LACS AND EXPENSE DISALLOWANCE U/R 8D(2)(II I) FOR RS.2.08 LACS. THE LD. CIT(A) CONFIRMED THE SAME SINCE THE A SSESSEES PLEA THAT INTEREST FREE FUNDS AVAILABLE WITH THE AS SESSEE WERE MORE THAN INVESTMENTS MADE BY THE ASSESSEE, WAS REJECTED . AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 2.3 THE LD. AR PLEADED TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR, WITH WHICH WE CONCUR. IT HAS ALSO BEEN SUBMITTED THAT TH E ASSESSEE HAS ALREADY OFFERED CERTAIN SUO-MOTO DISALLOWANCE IN IT S COMPUTATION OF INCOME. ACCORDINGLY, LD. AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME EARNED BY THE ASSESS EE. THE CREDIT OF SUO-MOTO DISALLOWANCE AS ALREADY OFFERED IN THE COMPUTATION OF INCOME SHALL BE PROVIDED. WE ORDER SO. THE APPEAL S TAND PARTLY ALLOWED. 3.1 IN AY 2014-15, THE ASSESSEE IS AGGRIEVED BY CAP ITALIZATION OF EXPENDITURE OF RS.76.26 LACS TO CLOSING WORK-IN-PRO GRESS AS ON 31/03/2014. IN AN ASSESSMENT U/S 143(3) AS FRAMED O N 29/12/2016, IT TRANSPIRED THAT THE ASSESSEE OFFERED RENTAL INCO ME, INTEREST INCOME, CAR PARKING CHARGES, SOCIETY FORMATION CHAR GES, AND 3 DISCOUNT RECEIVED ETC. UNDER BUSINESS INCOME. THE A SSESSEE WAS CARRYING OUT CERTAIN PROJECTS AND ACCORDINGLY, CAPI TALIZED RELATED EXPENDITURE AS WORK-IN-PROGRESS. HOWEVER, EXPENSES AGGREGATING TO RS.76.26 LACS WHICH WERE IN THE NATURE OF LABOR CHARGES, ELECTRICITY EXPENSES, PAINTING WORK, PURCHASE OF HA RDWARE ITEMS, PURCHASE OF METALS ETC. WERE DEBITED TO PROFIT & LO SS ACCOUNT. KEEPING IN VIEW THE FACT THAT STATED EXPENDITURE WA S RELATED TO ONGOING PROJECTS, LD. AO OPINED THAT THE SAME SHOUL D HAVE BEEN CAPITALIZED. THE ASSESSEE DID NOT FILE ANY REPLY TO EXPLAIN ITS STAND. CONSEQUENTLY, THE EXPENDITURE WAS DISALLOWED AND AD DED TO WORK- IN-PROGRESS. 3.2 BEFORE LD. CIT(A), THE ASSESSEE DREW ATTENTION TO THE FACT THAT THESE EXPENSES WERE ALREADY CAPITALIZED BY THE ASSE SSEE AND THE ACTION OF LD. AO WOULD RESULT INTO DOUBLE CAPITALIZ ATION OF THE EXPENDITURE. HOWEVER, SINCE THE ASSESSEE FAILED TO SUBSTANTIATE THE SAME, THE ACTION OF LD. AO WAS CONFIRMED. AGGRI EVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3.3 UPON CAREFUL CONSIDERATION OF FACTUAL MATRIX, I T IS EVIDENT THAT THE ASSESSEE HAS FAILED TO CLARIFY ITS POSITION BEF ORE BOTH THE AUTHORITIES. THE REQUISITE DETAILS COULD NOT BE ADD UCED. FOR PROPER ADJUDICATION, THE CORRECT FACTS NEED TO BE APPRECIA TED FIRST. THE SUBMISSIONS OF LD. AR ARE THAT THE ACTION OF LD. AO WOULD RESULT INTO DOUBLE CAPITALIZATION OF SAME EXPENDITURE. FRO M LD. ARS SUBMISSIONS, IT APPEARS THAT THE STATED EXPENDITURE WAS SUO-MOTO DISALLOWED BY THE ASSESSEE AND ALREADY CAPITALIZED IN WORK-IN- PROGRESS. THEREFORE, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF LD. AO FOR FRESH ADJUDICATION WITH A DIRECT ION TO THE ASSESSEE 4 TO PLACE ON RECORD CORRECT FACTUAL MATRIX AND SUBST ANTIATE ITS STAND. CONSEQUENTLY, THE APPEAL STAND ALLOWED FOR STATISTI CAL PURPOSES. 4. ITA NO. 1692/MUM/2019 STAND PARTLY ALLOWED WHERE AS ITA NO.1693/MUM/2019 STAND ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED ON 14 TH JANUARY, 2021. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 14/01/2021 SR.PS, JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./% ( 0 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.