SU-SAMPADA, Indore V. THE ITO 3(2), Indore

ITA 319/IND/2014

• Counselvise Citation: 31922714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: V K JHAVAR
• Keywords: Business income

Judgement Text

SU SAMPADA ITA NOS. 370/IND/2014, 319/IND/2014 AND CO 39/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 370/IND/2014 A.Y.2009-10 INCOME TAX OFFICER 3(2) INDORE ::: APPELLANT VS SU SAMPADA INDORE PAN AAUFS 5259B ::: RESPONDENT ITA NO. 319/IND/2014 A.Y.2009-10 SU SAMPADA INDORE ::: APPELLANT VS INCOME TAX OFFICER 3(2) INDORE ::: RESPONDENT SU SAMPADA ITA NOS. 370/IND/2014, 319/IND/2014 AND CO 39/IND/2014 2 CO NO. 39/IND/2014 ARISING OUT OF ITA NO. 370/IND/2014 SU SAMPADA INDORE ::: APPELLANT VS INCOME TAX OFFICER 3(2) INDORE ::: RESPONDENT ASSESSEE BY SHRI PRAKASH JAIN AND SHRI V.K. JHAVAR REVENUE BY SHRI R.A. VERMA DATE OF HEARING 6.10.2015 DATE OF PRONOUNCEMENT 1 . 1 2 .2015 O R D E R PER SHRI B.C. MEENA, AM THE APPEALS FILED BY THE REVENUE AND THE ASSESSEE AND THE CROSS OBJECTION FILED BY THE ASSESSEE EMANATE F ROM THE ORDER OF THE LEARNED CIT(A)-I, INDORE, DATED 21.2 .2014. 2. AT THE OUTSET OF THE HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE WANTS TO WITHDRAW THE CROSS OBJECTION. W E, THEREFORE, DISMISS THE SAME AS WITHDRAWN. SU SAMPADA ITA NOS. 370/IND/2014, 319/IND/2014 AND CO 39/IND/2014 3 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THE REVENUES APPEAL AND THE ASSESSEES APPEAL HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE WHILE DECIDING ITA NO. 446/IND/2013 AND IT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WHEREIN THE INTEREST INCOME ON THE TEMPORARY ADVANCES MADE WAS ALLOWED TO BE NETTED AGAINST THE INTEREST EXPENSES INCURRED ON THE FUNDS BORROWED FO R THE PURPOSE OF BUSINESS AND ALSO THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD. 4. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TRIBUNAL (SUPRA) IN THE ASSES SEES OWN CASE. THE TRIBUNAL VIDE PARA 4 OF ITS ORDER HAS OBSERVED AS UNDER :- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THE ASSESSEE IS IN THE BUSINESS OF CONS TRUCTION OF SU SAMPADA ITA NOS. 370/IND/2014, 319/IND/2014 AND CO 39/IND/2014 4 HOUSING PROJECT. DURING THE COURSE OF ITS BUSINESS, ADVANCES WERE RECEIVED FROM THE CUSTOMERS AGAINST BOOKING OF FLATS. THE FUNDS NOT SO IMMEDIATELY REQUIRED IN BUSINESS WAS TEMPORARILY INVESTED TO REDUCE THE INTEREST COST OF BUSINESS. THE INTEREST INCOME SO EARNED WAS NETTED AGAINST TH E INTEREST EXPENSE INCURRED ON THE FUNDS BORROWED FOR THE PURP OSE OF VERY SAME BUSINESS. KEEPING IN VIEW THE NATURE OF A SSESSEES BUSINESS IN WHICH ADVANCES WERE RECEIVED AGAINST BO OKING OF FLATS, THE INTEREST INCOME EARNED ON TEMPORARY ADVA NCE ESSENTIALLY PARTAKE THE SAME NATURE OF INCOME UNDER THE HEAD OF BUSINESS AND PROFESSION. HERE, ASSESSEE IS NOT A SKING TO TREAT THE INTEREST INCOME AS DERIVED FROM INDUSTRIA L UNDERTAKING SO AS TO ALLOW ANY EXEMPTION AVAILABLE TO THAT INDUSTRIAL UNDERTAKING. HERE, SIMPLY THE QUESTION I S RELATING TO NATURE OF INCOME RECEIVED. SINCE ADVANCE RECEIVED F ROM CUSTOMERS WAS IN REGULAR COURSE OF BUSINESS INTERES T EARNED ON SHORT TERM DEPOSIT OF SUCH FUNDS ALSO PARTAKES T HE SAME CHARACTER AS BUSINESS INCOME. THUS, THE NET INTERES T EXPENDITURE WAS DEBITED TO THE WORK IN PROGRESS. SI NCE NO SU SAMPADA ITA NOS. 370/IND/2014, 319/IND/2014 AND CO 39/IND/2014 5 PROJECT WAS COMPLETED DURING THE YEAR, NET INTEREST EXPENDITURE SO DEBITED IN WORK IN PROGRESS WAS SHOW N IN THE BALANCE SHEET. CONSEQUENT TO PROJECT COMPLETION MET HOD ADOPTED BY THE ASSESSEE, INTEREST WAS EARNED WAS SE T OFF AGAINST THE INTEREST PAID. BY CONSIDERING THE DECIS ION OF BOMBAY HIGH COURT WHICH WAS ON THE SIMILAR FACTS, T HE LD. CIT(A) DELETED THE ADDITION. IN THE CASE OF LOK HOL DINGS (SUPRA), THE HON'BLE BOMBAY HIGH COURT OBSERVED THA T WHERE THE ASSESSEE FIRM WAS ENGAGED IN CONSTRUCTION BUSIN ESS AND RECEIVED MONIES FROM THE PURCHASERS OF FLATS WHICH IT DEPOSITED WITH THE BANK, THE INTEREST INCOME EARNE D ON SUCH DEPOSIT SPRANG FROM THE BUSINESS ACTIVITIES OF THE ASSESSEE AND NOT OUT OF ANY INDEPENDENT ACTIVITY. IT WAS HEL D THAT INTEREST INCOME RECEIVED BY THE ASSESSEE WAS ASSESS ABLE AS BUSINESS INCOME AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. RESPECTFULLY FOLLOWING THE DECISION OF BO MBAY HIGH COURT, WHICH IS ON THE EXACTLY SIMILAR FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING NETTI NG OF INTEREST INCOME. SU SAMPADA ITA NOS. 370/IND/2014, 319/IND/2014 AND CO 39/IND/2014 6 5. IN VIEW OF THE ABOVE DECISION OF THE TRIBUNAL, WE FIND THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DENYING T HE CLAIM OF THE ASSESSEE. WE, THEREFORE, REVERSE THE ORD ERS OF THE AUTHORITIES BELOW WITH THE DIRECTION TO ALLOW NET TING OF INTEREST INCOME. IN THIS VIEW OF THE MATTER, THE APPE AL FILED BY THE ASSESSEE IS ALLOWED WHEREAS THE APPEAL FILED BY T HE REVENUE STANDS DISMISSED. 6. FINALLY, THE ASSESSEES APPEAL IS ALLOWED, APPEAL OF TH E REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSES SEE STANDS DISMISSED BEING WITHDRAWN. PRONOUNCED IN OPEN COURT ON IST DECEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER IST DECEMBER, 2015 DN/- SU SAMPADA ITA NOS. 370/IND/2014, 319/IND/2014 AND CO 39/IND/2014 7