DCIT, Jaipur V. MAHINDRA WORLD CITY(JAIPUR) LTD., Jaipur

ITA 217/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2147 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 04-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: RAJIV SOGANI C A DHK
• Keywords: Business income; Depreciation; Revenue expenditure

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 217/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S MAHINDRAS WORLD CITY (JAIPUR) LTD., 411, 4 TH FLOOR NEELKANTH TOWER, BHAWANI SINGH ROAD, C-SCHEME, JAIPUR. PAN NO.: AAECM 4950 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJIV SOGANI (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/04/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/04/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS THE APPEAL FILED BY THE REVENUE EMANATES FR OM THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 08/12/2015 FOR THE A. Y. 2011-12, WHEREIN THE REVENUE HAS TAKEN ONLY ONE EFFECTIVE GROUND OF APPEAL, WHICH IS AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN NOT SUSTAINING THE RE-COMPUTATION OF BOOKS PROFIT MADE BY THE A.O. AFTER BIFURCATING THE INTEREST EXPENSES AN D OTHER EXPENSES BETWEEN SEZ AND DTA UNITS. ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 2 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AGAINST NOT SUSTAINING THE RE-COMPUTATION OF BOOK PROFIT MADE BY THE ASSESSING OFFICER AFTER BIFURCATING THE INTEREST EXPENSES AND OTHER EXPENSE S BETWEEN SPECIAL ECONOMIC ZONE (SEZ) AND DOMESTIC TARIFF AREA (DTA) U NITS. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED ON 30/09/2011 DECLARING LOSS OF RS. 5,01,30,620/-. THE ASSESSEE IS ENGAGED IN DEVELOPMENT, OPERATING AND MAINTAINING SEZ AND THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IAB OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), BUT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT CHOSEN ITS FIRST YEAR OF DEDUCTION. THE ASSESSEE HAS DECLARED INCOME FOR THE YEAR UNDER CONSIDERATION OUT OF LEASE RENT PREMIUM, INTEREST I NCOME AS PART OF ITS BUSINESS INCOME. THE ASSESSEE HAS SHOWN WORKING OF MA T COMPUTATION AS UNDER:- PROFIT AS PER PART II & III OF SCHEDULE VI 1268579 5 LESS: PROFIT FROM SEZ 15408230 -2722435 THE ASSESSEE HAS CLAIMED NET PROFIT OF RS. 1,26,85,7 95/- IN THE P&L ACCOUNT AS PER THE COMPANIES ACT. WHILE COMPUTING T HE BOOK PROFIT FOR MAT PURPOSES, THE ASSESSEE HAS DEBITED PROFIT FROM S EZ AT RS. 1,54,08,230/- FROM THE NET PROFIT OF RS. 1,26,85,79 5/-. THUS THE ASSESSEE HAS CALCULATED LOSS. THE ASSESSING OFFICER NOTICED T HAT THE ASSESSEE HAS ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 3 NOT PROPORTIONATELY BIFURCATED THE EXPENSES ON THE BASIS OF TURNOVER AND AFTER MAKING VARIOUS CALCULATIONS REGARDING BIFURCA TION OF THE VARIOUS EXPENSES, THE ASSESSING OFFICER HAS FINALLY CALCULA TED BOOK PROFIT AT RS. 1,26,85,795/-. 3. THE LD. CIT(A) HAS DELETED THE ADDITION BY HOLDING AS UNDER:- 3.1.2 (I) THE FACTS OF THE CASE ARE THAT THE APPE LLANT COMPANY MAHINDRA WORLD CITY (JAIPUR) LTD. (HEREIN AFTER REFERRED TO AS MWCJL OR COMPANY) IS A JOINT VENTURE BETWEEN RAJASTHAN GOV ERNMENT (THROUGH RIICO) AND MAHINDRA GROUP (THROUGH MAHINDR A LIFE SPACE DEVELOPERS LTD.) IN THE RATIO OF 26:74 WHEREB Y MWCJL IS A PROJECT COMPANY INCORPORATED TO DEVELOP SPECIAL ECO NOMIC ZONE(SEZ) AND DOMESTIC TARIFF AREA (DTA) IN JAI PUR CITY IN AN AREA OF 2636 ACRES OF LAND. THE APPELLANT COMPANY F ILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION D ECLARING LOSS OF RS. 5,01,30,620/-. THE BOOK PROFIT FOR THE PURPO SE OF CALCULATION OF MAT WAS ALSO WORKED OUT TO BE NIL BY THE APPELLANT COMPANY IN ITS RETURN OF INCOME (ROI). IT IS ENGAGED IN THE DEVELOPMENT OF MULTIPRODUCT SEZ WITH DEDICAT ED ZONES FOR IT / ITES, ENGINEERING AND RELATED INDUSTRIES, HAND ICRAFTS, APPAREL, GEMS AND JEWELLERY, WAREHOUSING AND LOGIST ICS (COLLECTIVELY REFERRED TO AS SEZ). AREAS EARMARKE D FOR SEZ ARE FURTHER BIFURCATED INTO HORIZONTAL AND VERTICAL ARE AS. IN VERTICAL AREAS (ALSO REFERRED TO AS EVOLVE'), ASSESSEE COMP ANY DEVELOPS BUILDINGS AND DERIVES RENTAL INCOME BY LETTING IT O UT ON RENT. WHEREAS IN HORIZONTAL AREAS, THE ASSESSEE COMPANY D EVELOPS LAND AND GIVES IT ON LONG TERM LEASE. IT IS ALSO EN GAGED IN DEVELOPED OF A DOMESTIC TARIFF AREA (DTA) FOR VARIO US INDUSTRIES. ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 4 (II) THE ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) VIDE ORDER DATED 26.03.2014. IT IS NOTED FROM THE ASSESSMENT O RDER THAT THE AO OBSERVED THAT THE APPELLANT HAS SHOWN BOOK PROFI T FOR MAT PURPOSES AS UNDER: PROFIT AS PER PART II AND III OF SCHEDULE VI RS. 1,26,85,795/- LESS: PROFIT FROM SEZ RS. 1,54,08,230/- RS. (-) 27,22,435/- (III) IT WAS OBSERVED BY THE AO THAT THE APPELLATE HAS BIFURCATED VARIOUS EXPENSES INTO THE HEAD OF SEZ AND DTA. THOS E WHICH ARE INCURRED FOR DEVELOPING SEZ UNIT WERE GROUPED UNDER THE HEAD SEZ AND THOSE RELATED TO DTA UNIT WERE GROUPED UNDE R THE HEAD DTA. VARIOUS EXPENDITURES LIKE COST OF LAND AND DEV ELOPMENF, INTEREST AND DEPRECIATION WAS BIFURCATED INTO SEZ A ND DTA ON BASIS OF SEPARATE ACCOUNTS MAINTAINED BY THE APPELL ATE WHICH CLEARLY DEMARCATED WHICH EXPENDITURE IS INCURRED FO R SEZ UNIT AND WHICH IS INCURRED FOR DTA UNIT. THE REMAINING C OMMON DAY TO DAY EXPENSES WERE GROUPED INTO THE HEAD OTHER E XPENSES AND BIFURCATED INTO DTA AND SEZ EXPENSES. THESE OT HER EXPENSES INCLUDE CONVEYANCE, TELEPHONE, AUDIT FEES , ELECTRICITY, ADVERTISEMENT EXPENSES ETC. (IV) THE AO, NOT SATISFIED WITH THE EXPLANATION SUB MITTED BY THE APPELLANT, RECOMPUTED THE PROFITS DERIVED BY THE AP PELLANT COMPANY FROM ITS SEZ OPERATIONS BY BIFURCATING THE TOTAL INTEREST AND OTHER EXPENSES, FOR SEZ AND DTA OPERAT IONS, ON THE BASIS OF TURNOVER BY OBSERVING AS UNDER: * IT IS IMPOSSIBLE TO PRECISELY DISTINGUISH WHETHE R EXPENDITURE WAS INCURRED FOR SEZ OR DTA UNIT. * MANY EXPENSES FOR EG. AUDITOR'S FEE, TELEPHONE E XPENSES ARE INTERMINGLED AND IT IS DIFFICULT TO DISTINGUISH HOW MUCH WAS INCURRED FOR SEZ UNIT AND DTA UNIT. ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 5 * IT APPEARS QUITE IMPRACTICAL THAT ASSESSEE HAS IN CURRED INTEREST EXPENDITURE TO THE TURN OF RS. 17,45,35,31 3/- FOR DTA UNIT JUST EARNING REVENUE OF 63,60,339. BUT IN SEZ UNIT IT HAS INCURRED ONLY RS. 13,22,84,826/- TO EARN REV ENUE OF AS HIGH AS RS. 41,99,74,895/-. THE ONLY PLEA TAKEN BY THE APPELLANT IS THAT IT HAS SEPARATELY DEMARCATED ITS EXPENSE. BUT IT APPEARS MORE OF AN AFTERTHOUGHT TO CLEVERLY SHIFT ALL THE EXPENSES TO DTA UNIT SO THAT DTA'S PROFIT IS RE DUCED AND SEZ PROFIT IS INCREASED, THEREBY EVADING TAX. * THE ONLY LOGICAL BASIS FOR DIVIDING THE EXPENSES IS ON THE RATION OF ITS TURNOVER. THIS IS THE ONLY SCIENTIFIC BASIS ON WHICH ASSESSEE COULD HAVE DIVIDED HIS EXPENSES WHIL E MAKING MAT COMPUTATION. (V) IN VIEW OF THE ABOVE, THE AO WORKED OUT LOSS FR OM SEZ AT RS. 18,16,35,777/- INSTEAD OF PROFIT OF RS. 1,54,08,230 /- AS DECLARED BY THE APPELLANT COMPANY AND THUS, WHILE COMPUTING THE MAT, THE AO TAKEN THE BOOK PROFIT AT 1,26,85,795/- AGAIN ST NIL SHOWN BY THE APPELLANT COMPANY. (VI) DURING APPELLATE PROCEEDINGS, IT WAS ADMITTED BY THE APPELLANT COMPANY THAT SEPARATE SET OF BOOKS FOR SEZ AND DTA WERE NOT MAINTAINED BY IT AND IT WAS ITS CONTENTION THAT THE BOOKS OF ACCOUNTS WERE MAINTAINED IN A MANNER THAT THE REVEN UE EARNED, EXPENDITURE INCURRED, ADDITIONS/DELETIONS MADE TO T HE WORK IN PROGRESS COULD BE PRECISELY DETERMINED SEPARATELY F OR DTA AND SEZ AT ANY POINT OF TIME BY IT AS FROM 1-APR-2009 O NWARDS, IT MAINTAINED ITS BOOKS OF ACCOUNTS IN SAP SOFTWARE AN D FOR BIFURCATION OF EXPENSES INTO THOSE INCURRED FOR SEZ AND DTA, IT DEVELOPED VARIOUS COST CENTERS WHICH WERE ASSIGNED DIFFERENT CODES IN SAP. ALL THE EXPENSES, INCLUDING PAYROLL C OST, ARE TAGGED TO THESE COST CENTERS AT THE TIME OF THEIR BOOKING. ONCE THE EXPENSES ARE BIFURCATED INTO COST CENTERS, THEY ARE FURTHER ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 6 BIFURCATED INTO EXPENDITURE OF REVENUE NATURE AND T HOSE TO BE ADDED TO THE WORK IN PROGRESS. FURTHER, THE EXPENSE S OF REVENUE NATURE ARE FINALLY BIFURCATED INTO DTA AND SEZ ON T HE BASIS OF TURNOVER. THE INTEREST COST IS BIFURCATED ON THE BA SIS OF AREA DEVELOPED UNDER DTA AND SEZ. HENCE THE ACCOUNTING S YSTEM LEADS TO PREPARATION OF TRUE AND FAIR FINANCIAL STA TEMENTS NOT ONLY OF THEIR COMPANY AS A WHOLE BUT ALSO IN RESPEC T OF EACH DIVISION AND FURTHER WITHIN EACH DIVISION ON THE AR EA UNDER WORK IN PROGRESS/ CAPITAL WORK IN PROGRESS VIS A VIS THE AREA ALREADY DEVELOPED AND CONVERTED INTO STOCK IN TRADE / FIXED ASSETS. (VII) REGARDING INTEREST EXPENSES, IT WAS SUBMITTED BY THE APPELLANT THAT: * IT HAS TAKEN TWO TYPES OF LOANS, .E. LOANS SPECIF ICALLY TAKEN FOR DEVELOPING AREA UNDER EVOLVE CATEGORIZED AS EVOLVE LOAN AND LOANS TAKEN FOR DEVELOPMENT OF BOTH SEZ A ND DTA ORE CATEGORIZED AS 'INFRO LOONS. * THE INTEREST AND FINANCE EXPENSES TOKEN SPECIFICA LLY FOR EVOLVE ARE BIFURCATED INTO REVENUE AND ADDITIONS TO CAPITOL WORK IN PROGRESS ON THE BASIS OF THE AREA DEVELOPED AND UNDER DEVELOPMENT. * INTEREST EXPENSES INCURRED ON THE LOAN UTILIZED F OR THE DEVELOPMENT OF BOTH DTA AND SEZ ORE BIFURCATED INTO REVENUE NATURE AND ADDITIONS TO WORK IN PROGRESS ON THE BASIS OF AREA DEVELOPED AND AREA UNDER DEVELOPMENT ON A MONTHLY BASIS. FURTHER THE REVENUE EXPENSES ARE FUR THER BIFURCATED INTO THAT PERTAINING TO DTA AND SEZ ON T HE BASIS OF AREA OCCUPIED. * BALANCE INTEREST EXPENSES INCURRED BY THE ASSESSE E COMPANY ADDED TO THE CAPITAL WORK IN PROGRESS:- * INTEREST EXPENSES ADDED TO WORK IN PROGRESS HAVE BEEN BIFURCATED INTO SEZ AND DTA BASED ON THE MONTH WISE AREA UNDER DEVELOPMENT/ DETAILS ARE AS UNDER:- * THUS INTEREST AND FINANCE CHARGES' 1 WERE ADDED TO THE TOTAL EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT OF THE ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 7 ASSESSEE COMPANY FOR THE RELEVANT ASSESSMENT YEAR. HOWEVER, MAJOR PART OF THE EXPENSES WERE SUBSEQUENT LY ADDED TO THE CAPITAL WORK IN PROGRESS/WORK IN PROGR ESS. (VIII) I HAVE DULY CONSIDERED THE SUBMISSIONS OF TH E APPELLANT COMPANY, ASSESSMENT ORDER AND MATERIAL PLACED ON RE CORD AND FIND MERIT IN ITS SUBMISSIONS. DURING APPELLATE PROCEEDINGS, THE APPELLATE HAS SUBMITTED IN DETAIL HOW IT HAS BIFURCATED EXPENDITURE BETWEEN DTA AND SEZ OPERATIONS AND FURTHER, THE BIFURCATION OF REVENUE EXPENDITURE INTO DTA AND SEZ UNITS. THE AO HAS WORK ED OUT LOSS OF SEZ AT RS. 18,16,35,777/- AGAINST PROFIT OF RS. 1,54,08,230/- SHOWN BY THE APPELLANT COMPANY. THE A O HAS NOT DISTURBED THE BOOK PROFIT OF THE APPELLANT COMP ANY AS A WHOLE SHOWN AT RS. 1,26,85,795/- WHICH MEANS THAT P ROFIT IN DTA UNIT WAS TO THE TUNE OF RS. 19,43,21,572/- WHIC H IS ABSURD. IT IS NOTED THAT ACCORDING TO THE CALCULATI ON OF AO, THE APPELLANT COMPANY EARNED A PROFIT OF RS. 126.85 LAC FROM ITS DTA OPERATIONS ON REVENUE OF RS. 63.60 LAC , WHICH IS AGAIN ABSURD. (IX) IT IS ALSO NOTED THAT OUT OF TOTAL INTEREST AN D FINANCE EXPENSES OF RS. 30.68 CRORE AS DEBITED IN THE PROFI T AND LOSS ACCOUNT, ONLY RS. 10.18 CRORE WERE ACTUALLY CHARGED TO P & L ACCOUNT AND THE BALANCE AMOUNT OF RS. 19.50 CRORE T AKEN TO WIP/CWIP AND THIS ASPECT HAS TOTALLY BEEN IGNORED B Y THE AO WHILE DETERMINING PROFIT FROM SEZ AND DTA OPERAT IONS. (X) IT IS NOTED THAT THE AO IGNORED THE FACT THAT T HE APPELLANT COMPANY HAS CONSISTENTLY FOLLOWED A SYSTEMATIC METH OD FOR BIFURCATING THE EXPENSES INTO DTA AND SEZ. FOR THE PURPOSE OF BIFURCATING EXPENSES OF REVENUE NATURE, INTO EXP ENSES FOR ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 8 SEZ AND DTA, APPELLANT COMPANY HAS ACTUALLY TAKEN R EVENUE FROM SEZ AND DTA AS THE BASE. (XI) THE AO IGNORED THE FACT THAT ALTHOUGH THE APPE LLANT COMPANY INCURRED INTEREST EXPENDITURE TO THE TUNE O F RS. 1745.35 LACS IN DTA, BUT OUT OF THIS SUM ONLY RS. 6 0.25 LACS (3% OF RS. 1745.35 LACS) WAS CHARGED TO THE P&L ACC OUNT. FURTHER SINCE 66% OF THE LAND AREA (1744 ACRES OUT OF 2636 ACRES) HAS BEEN EARMARKED FOR DTA OUT OF WHICH 96% (1677 ACRES OUT OF 1744 ACRES) WAS UNDER DEVELOPMENT DURI NG THE RELEVANT ASSESSMENT YEAR, HIGHER AMOUNT OF INTEREST EXPENSES PERTAINED TO DTA. (XII) IN VIEW OF THE TOTALITY OF FACTS AND CIRCUMST ANCES OF THE CASE 'AND ESPECIALLY LOOKING TO THE FACT THAT THE APPELL ANT COMPANY IS MAINTAINING ITS BOOKS OF ACCOUNTS IN SAP SOFTWARE CONSISTENTLY AND THE VARIOUS EXPENSES ARE ALLOCATED TO VARIOUS COST CENTERS ON A PREDETERMINE D AND SCIENTIFIC BASIS AND THE REVENUE COMPONENT OF THE I NTEREST EXPENSES WERE ALLOCATED ON TURNOVER BASIS, IT IS HE LD THAT THE AO WAS NOT JUSTIFIED IN ALLOCATING THE TOTAL INTERE ST AND OTHER EXPENSES ON THE BASIS OF TURNOVER AS THESE LE ADS TO ABSURD RESULTS WHICH CANNOT BE ALLOWED. THEREFORE, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN APPORTIONING INTEREST/FINANCE CHARGES AND OTHER EXPENSES BETWEEN SEZ AND DTA UNITS OF THE APPELLANT COMPANY ON THE BASIS OF TURNOVER ONLY. THEREFORE, THE BOOK PROFIT DETERMINE D BY THE AO FOR THE PURPOSE OF MAT CANNOT BE SUSTAINED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. CI T DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. ON THE ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 9 CONTRARY, THE LD AR OF THE ASSESSEE HAS REITERATED THE ARGUMENTS AS MADE BEFORE THE LD. CIT(A) AND VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS ADMITTED DUR ING THE APPELLATE PROCEEDINGS THAT NO SEPARATE BOOKS OF ACCOUNT FOR S EZ AND DTA WERE MAINTAINED. HOWEVER, IT WAS CLAIMED THAT THE BOOKS OF ACCOUNT ARE SO MAINTAINED THAT REVENUE EARNED THE EXPENDITURE INCU RRED, THE ADDITIONS/DELETIONS MADE TO THE WORK IN PROGRESS COU LD BE PRECISELY DETERMINED SEPARATELY IN DTA AND SEZ AT ANY POINT O F TIME W.E.F. 01/4/2009. IT WAS ALSO CLAIMED THAT THE ACCOUNTS WERE MAINTAINED IN SAP SOFTWARE AND FOR BIFURCATION OF EXPENSES BETWEEN THE SEZ AND DTA, VARIOUS COST CENTERS WHICH HAS BEEN ASSIGNED DIFFERE NT CODES IN SAP ARE MAINTAINED AND IT WAS CLAIMED THAT ONCE THE EXPENDIT URE HAS BEEN BIFURCATED IN THE COST CENTERS THEN THEY ARE FURTHE R BIFURCATED INTO THE REVENUE OR CAPITAL. THE REVENUE EXPENSES FURTHER BI FURCATED BETWEEN THE DTA AND SEZ ON THE BASIS OF TURNOVER. THIS CLAIM OF THE ASSESSEE ITSELF APPEARS TO BE CONTRADICTORY AS ONCE IT HAS BEEN CLA IMED THAT VARIOUS COST CENTERS ASSIGNED DIFFERENT CODES BIFURCATE THE EXPE NSES BETWEEN THE SEZ ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 10 AND DTA AND THEN THE EXPENSES ARE FURTHER BIFURCATE D INTO REVENUE AND CAPITAL AND THEN FURTHER AGAIN REVENUE EXPENSES WERE FINALLY BIFURCATED INTO DTA AND SEZ ON THE TURNOVER BASIS. FURTHER WITH REGARD TO THE INTEREST COST IT IS CLAIMED THAT IT IS BASED ON THE AREA DEVELOPED UNDER DTA AND SEZ. IN OUR CONSIDERED VIEW, ALTHOUGH THE AS SESSEE HAS CLAIMED THAT HE IS MAINTAINING BOOKS OF ACCOUNT AND SAP SOF TWARE AND VARIOUS EXPENSES ARE ALLOCATED BY THE VARIOUS COST CENTERS ON A PREDETERMINED AND SCIENTIFIC BASIS AND REVENUE COMPONENT OF THE I NTEREST EXPENSES WERE ALLOCATION ON TURNOVER BASIS, APPEARS TO BE MIS LEADING. THE ASSESSEE HAS GOT VARIOUS TYPES OF LOANS AND THE LOA NS ARE UTILIZED FOR THE DEVELOPMENT OF SEZ AND DAT. SINCE THE AREA IS DEMARC ATED AND THE LOAN EXPENDITURE INCURRED ON THESE AREAS CAN BE IDENTIFI ED WITHOUT ANY DIFFICULTY. FURTHER THE INCOME OF THE ONE AREA QUAL IFIED FOR DEDUCTIONS WHILE THE INCOME OF OTHER AREA IS TAXABLE. THEREFORE, THE OBLIGATION IS ON THE ASSESSEE TO IDENTIFY THE BORROWED AMOUNT SPENT O N THE DEVELOPMENT OF SEZ AND DTA SEPARATELY. SIMPLY MAKING A CLAIM TH AT THE ASSESSEE IS HAVING MAINTAINED ACCOUNT IN SAP SOFTWARE IN SCIENTI FIC MANNER SHALL NOT ESTABLISH THE CORRECTNESS OF THE ALLOCATION OF THE EXPENSES BETWEEN THE TWO SEZ AND DTA, THEREFORE, IN THE INTEREST OF JUSTI CE AND EQUITY, WE FIND IT APPROPRIATE TO REMAND THE ISSUE TO THE FILE OF T HE ASSESSING OFFICER TO BE DECIDED DE NOVO. THE ASSESSEE IS DIRECTED TO PROD UCE ALL THE RELEVANT ITA 217/JP/2016 DCIT VS. M/S MAHINDRA WORLD CITY (JAIPUR) LTD. 11 DOCUMENTS/INFORMATION WITH REGARD TO THE VARIOUS EXP ENSES INCURRED IN THE DEVELOPMENT IN SEZ AND DTA UNITS. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2017. SD/- SD/- DQY HKKJR HKKXPAN (KUL BHARAT) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH APRIL, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S MAHINDRAS WORLD CITY (JAIPUR) LT D., JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 217/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR