M/S NEPTUNE RESORTS & DEVELOPMENT PVT LTD., MUMBAI V. DY CIT CIRCLE- 3 (2)(2), MUMBAI

ITA 318/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6301 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 142(1); 143(1); 201; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VP AND SHRI AMARJIT SINGH, JM / I.T.A. NO. 318 /MUM/20 20 ( / ASSESSMENT YEAR: 201 2 - 13 ) M/S. NEPTUNE RESORTS & DEVELOPMENT PVT. LTD. B - 145/146 MITTAL T OWERS, OPP. NEW COUNCIL HA LL, NARIMAN POINT, MUMBAI - 400021 . / VS. DCIT, CIRCLE - 3(2)(2) AAYAKAR BHAVAN, MAHARISHI KARVE MARG, CHURCHGATE, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AABCN1375M ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 28 / 0 6 / 20 2 1 /DATE OF PRONOUNCEMENT: 07 / 0 7 / 2021 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 28 .0 6 .20 21 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 09 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 201 2 - 13 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - (A ) DISALLOWANCE OF INTEREST U/S. 24 (I ) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 9. MUMBAI CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCO ME TAX, CIRCLE 3(2)(2). MUMBAI (AO) DISALLOWING THE APPELLANT'S CLAIM OF INTEREST U/S. 24 AMOUNTING TO RS.13 , 10 , 462/ - . ASSESSEE BY : SHRI SANJAY PARIKH REVENUE BY: SHRI THARIAN OOMMEN (DR) ITA NO . 318 / M UM /20 20 A.Y. 2012 - 13 2 2) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE FACTUM OF BORROWING AND PAYMENT OF INTEREST ON SUCH BORROWING HAS TO BE DISCERNIBLE AND I T CANNOT BE ALLOWED ON ESTIMATE BASIS WITHOUT BEING SURE ABOUT THE QUANTUM OF BORROWING AND THE SPECIFIC LINKAGE OF THE FUNDS. 3) THE LEARNED CIT (A) ERRED IN HOLDING THAT THE APPELLANT HAS CONSIDERED THE SALE VALUE OF THE FLATS WHILE CONVERTING THOSE INTO INVESTMENTS. 4) THE APPELLANT PRAYS THAT THE INTEREST CLAIMED BY THE APPELLANT U/S 24 OF R S. 13, 10,462/ - AND DISALLOWED BY THE AC) AND CONFIRMED BY THE CIT(A) MAY BE DELETED. B) GENERAL 5) THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO ONE ANOTHER AN D THE APPELLANT CRAVES LEAVE TO ADD. ALTER. AMEND. DELETE OR MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 25 .09.201 2 DECLARING TOTA L INCOME TO THE TUNE OF RS.37,81,117 / - . TH E RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY IS A DOMESTIC COMPANY ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT. DURING THE YEAR, THE ASSESSEE HAS EARNED INCOME BY SALE OF FLATS. DURING THE YEAR UNDER ASSESSMENT, THE ASSESSEE CLAIMED RS. 13,10,462/ - AS INTEREST EXPENDITURE AGAINST THE HOUSE PROPERTY INCOME OF THE ASSESSEE. NOTICE WAS ISSUED AND A FTER THE REPLY OF THE ASSESSEE, THE INTEREST TO THE TUNE OF RS. 13,10,462/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE U/S 24(B) OF THE ACT. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 50,91,580/ - . FEELING AGGRIEVED, THE ASSE SSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AO , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ITA NO . 318 / M UM /20 20 A.Y. 2012 - 13 3 ISSUE NO . A ( 1 TO 5) 4 . UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF INTEREST CLA IMED BY THE AS SESSEE IN VIEW OF THE PROVISIONS U/S 24(B) OF THE ACT TO THE TUNE OF RS. 13,10,462/ - . THE ASSESSEE IS IN THE BUSINESS OF PROPERTY DEVELOPMENT AND HAS EARNED THE INCOME BY SALE OF FLATS. THE ASSESSEE DEVELOPED THE PROPERTY BY OWN FUND AS WELL AS BY TAKING TH E LOANS. THE ASSESSEE CLAIMED THE INTEREST ON LOAN AS INCOME UNDER THE HEAD INCOME FROM BUSINESS . SOME FLATS REMAIN ED UNSOLD AND THE ASSESSEE TREATED THE SAME AS INVESTMENT. THE ASSESSEE CLAIMED THE PRO RATA INTEREST ON THE VALUE OF FLATS IN VIEW OF THE PROVISIONS U/S 24(B) OF THE ACT. THERE IS NOTHING ON RECORD TO WHICH IT CAN BE ASSUMED THAT THE ASSESSEE HAS TAKEN THE LOAN FROM ANY OTHER PURPOSES. THE APPELLANT O W N SHARE CAPITAL WAS OF RS.5,00,000/ - AND THE REMAIN ING AMOUNT WAS FOR THE CONSTRUCTION OF PROJECT. THE LOAN WAS ALSO UTILIZED BY ASSESSEE FOR THE PURPOSE OF LOAN TO M/S. APTE AMALGAMATION LTD. AND M/S. TECHNO INSURANCE PVT. LTD. THE INTEREST RECEIVED FROM THESE COMPANIES WAS SHOWN AS INCOME AND OFFERED TO TAX. THE REMAIN INTEREST UPON THE LOAN TO THE TUNE OF RS.13,10,462/ - WAS CLAIMED AGAINST THE INCOME FROM HOUSE PROPERTY. THE PURPOSES FOR TAKING THE LOAN HAS CLEARLY ESTABLISHED ON RECORD. THE BALANCE - SHEET REVEALS THAT THE SHARE CAPITAL AND RESERVED WAS TO THE TUNE OF RS. 1,35,86,503/ - WHEREAS THE APPELLANTS INVESTED IN THE BALANCE - SHEET TO THE TUNE OF RS.2,86,81,317/ - . THE BORROWED FUND WAS TO THE TUNE OF RS. 1,50,94,814/ - . IN THE BIFURCATION OF INTEREST IS ON RECORD , THEREFORE, AFTER TREATING THE INVESTMENT WHICH HAS BEEN LET OUT, T HE ASSESSEE HAS RIGHTLY CLAIMED THE INTEREST WHICH IS NOT LIABLE TO BE DECLINED IN ANY MANNER. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON RECORD AND ALLOWED THE CLAIM OF THE ASSESSEE. ITA NO . 318 / M UM /20 20 A.Y. 2012 - 13 4 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON 07 /07 /202 1 SD/ - SD/ - ( PRAMOD KUMAR ) (AMARJIT SINGH) / VICE PRES IDENT /JUDICIAL MEMBER MUMBAI; DATED : 07 /07 /2021 V IJAY PAL SINGH/ SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / T HE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI