Assistant Commissioner of Income-tax, Circle - 4, Pune V. Pune Mumbai Realty Pvt.Ltd, Pune

ITA 2463/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1606 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-11-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 23-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K VERMA

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE SHRI VIKAS AWASTHY, JM . / ITA NO. 2463/PUN/2017 ! '! / ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, PUNE. ....... / APPELLANT # / V/S. PUNE MUMBAI REALTY PVT. LTD. 10 TH FLOOR, KUMAR BUSINESS CENTRE, (KBC), CTS NO. 29, OPP. PUNE CENTRAL, BUND GARDEN ROAD, PUNE-411 001 PAN : AADCP8622M / RESPONDENT RESPONDENT BY : SHRI M.K. VERMA APPELLANT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 22.11.2018 / DATE OF PRONOUNCEMENT : 26.11.2018 $ / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3, PUNE DATED 27.06.2 017 FOR THE ASSESSMENT YEAR 2010-11. 2 ITA NO.2463/PUN/2017 A.Y.2010-11 2. THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTEREST EXPENDITURE O F RS.81,79,110/- WITHOUT APPRECIATING THE FACT THAT IT IN TURN LEADS TO OVER VALUATION OF QUALIFYING ASSETS (STOCK IN TRADE IN THE ASSESSEES CASE) THAT WILL AFFECT THE FUTURE PROFITABILITY WITH THE SAME AMOUNT AT THE TIME OF SALE OF SUCH QUALIFYING ASSETS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE INTEREST SO CAPITALI ZED AS QUALIFYING ASSETS ARE TRADING ASSETS IN CASE OF THE ASSESSEE AS IT IS INV OLVED IN THE BUSINESS OF SALE AND PURCHASE OF LAND. 3. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE OR RAISE ANY GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. SHRI M.K. VERMA REPRESENTING THE DEPARTMENT SUBMITTED THAT DURING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBS ERVED THAT THE ASSESSEE COMPANY HAD ADVANCED INTEREST FREE LOANS TO T HE PERSONS NAMELY I) KRUTI JAIN; II) L.K. JAIN (HUF) AND III) L.K. JAIN. BEFORE THE ASSESSING OFFICER, ASSESSEE FILED NO OBJECTION FOR THE ADDITION VIDE LETTER DA TED 08.02.2013. IN FIRST APPELLATE PROCEEDINGS, THE ASSESSEE DISPUTED THE GRANT OF ANY CONCESSION FOR MAKING ADDITION. THE COMMISSIONER OF INCOME TAX (APPEALS) DE LETED THE ADDITION ON THE PREMISE THAT THE ENTIRE INTEREST COMPONENT HAS BEEN CAPITALIZED IN QUALIFYING ASSETS AND THE DISALLOWANCE HAS RESULTED IN REDU CING QUANTUM OF INTEREST ATTRIBUTABLE TO QUALIFYING ASSETS. 4. ON THE OTHER HAND, SHRI NIKHIL PATHAK APPEARING ON BEH ALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOM E TAX (APPEALS). THE LD. AR SUBMITTED THAT ALLEGED LETTER OF CONCESSION DATE D 08.02.2013 REFERRED TO BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WAS NEVER FILED BY THE ASSESSEE. 3 ITA NO.2463/PUN/2017 A.Y.2010-11 5. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERU SED. THE SOLITARY ISSUE RAISED IN APPEAL BY THE DEPARTMENT IS AGAINST DELETIN G OF DISALLOWANCE OF INTEREST EXPENDITURE RS.81,79,110/-. UNDISPUTEDLY, THE ASSE SSEE HAS ADVANCED INTEREST FREE LOANS TO THREE PERSONS NAMELY I) KRUTI JAIN ; II) L.K. JAIN (HUF) AND III) L.K. JAIN. I OBSERVE THAT THE ASSESSING OFFICER HAS MADE ADDITION MERELY ON THE BASIS OF ALLEGED NO OBJECTION GIVEN BY THE ASSESSEE FO R MAKING ADDITION VIDE LETTER DATED 08.02.2013 AND THE COMMISSIONER OF INCOME T AX (APPEALS) DELETED THE ADDITION BY HOLDING THAT DISALLOWANCE HAS RESULTED INTO REDUCING THE QUANTUM OF INTEREST. BOTH THE AUTHORITIES BELOW HAVE FAILED TO EXAMINE MERITS AND TRUE FACTS BEFORE DECIDING THE ISSUE IN HAND. 6. IN SO FAR AS THE ISSUE WHETHER THE CONCESSION WAS G IVEN BY ASSESSEE OR NOT, IS A MATTER OF DEBATE AS LETTER GRANTING CONCESSION DATE D 08.02.2013, IS NOT AVAILABLE BEFORE THE TRIBUNAL. DEHORS THE CONCESSION ALLEGED LY ALLOWED BY THE ASSESSEE FOR THE ADDITION, I DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEALS) FOR ADJUDICATING THE ISSUE ON MERITS. THE COMMISSIONER OF INCOME TAX (APPEALS) WILL DECIDE THE ISSUE AFRESH AFTER AFFORDING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND APP EAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE IN THE TERMS AFORESAID. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPO SE. ORDER PRONOUNCED ON MONDAY THE 26 TH DAY OF NOVEMBER, 2018. SD/- ( /VIKAS AWASTHY) / JUDICIAL MEMBER / PUNE; ! ' / DATED : 26 TH NOVEMBER, 2018. SB 4 ITA NO.2463/PUN/2017 A.Y.2010-11 $%&'()'' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-3, PUNE. 4. THE PR. CIT-2, PUNE. 5. %&' () , * () , - +,- , / DR, ITAT, SMC BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // * 2 / BY ORDER, 3 (- /PRIVATE SECRETARY * () , / ITAT, PUNE.