Appeal details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 7053 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 1 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-07-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2010-2011
Appeal Filed On
08-06-2015
Judgement Text
1 ITA NO. 3734/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI P. M. JAGTAP, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 3734/DEL/201 5 ( A.Y 2010-11) DCIT CIRCLE-(7)1, ROOM NO. 403, C. R. BUILDING, I. P. ESTATE NEW DELHI (APPELLANT) VS DLF UTILITIES LTD. 10 E, NAAZ CINEMA COMPLEX, JHANDEWALAN EXTENSION NEW DELHI AAACN3199A (RESPONDENT) APPELLANT BY SH. ARUN KUMAR YADAV, SR. DR RESPONDENT BY SH. R. S. SINGHVI, ADV ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 09/03/2015 PASSED BY CIT (A)-III, NEW DELHI FOR ASSESSMENT YEA R 2010-11. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD.CIT (A) HAS ERRED IN DELETING THE ADDIT ION OF RS.72,48,624/- MADE BY THE A.O ON ACCOUNT OF INTEREST CHARGEABLE O N INTEREST FREE ADVANCES GIVEN TO DLF LIMITED U/S BY INVOKING PROVI SION OF SECTION 36(1) DATE OF HEARING 10.07.2018 DATE OF PRONOUNCEMENT 13.07.2018 2 ITA NO. 3734/DEL/2015 (III) OF THE ACT. 3 . THE ASSESSEE IS A LIMITED COMPANY INCORPORATED ON 2 1/8/1989 AND IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND OTHER AL LIED ACTIVITIES AS STATED IN THE MEMORANDUM THE ARTICLES OF ASSOCIATION OF THE A SSESSEE COMPANY. THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME DECLAR ING LOSS OF RS.54,36,95,544/- FOR THE ASSESSMENT YEAR 2010-11 ON 13/10/2010. SU BSEQUENTLY, THE ASSESSEE COMPANY FILED ITS REVISED RETURN OF INCOME DECLARING LOSS OF RS.54,36,95,544/- ON 29/3/2012. THE CASE WAS SELEC TED FOR SCRUTINY AND AS AGAINST THE RETURN LOSS OF RS.54,36,95,544/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 AT LOSS OF R S.53,64,46,920/- AND MADE ADDITION OF RS.72,48,624/- FOR THE YEAR UNDER CONSI DERATION. 4. BEING AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSE E. 5. THE LD. AR SUBMITTED THAT IN PRECEDING YEAR AND IN SUBSEQUENT YEARS I.E. ASSESSMENT YEAR 2008-09 & 2011-12, THIS ISSUE IS AL LOWED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE (ITA NO. 4348/DEL/2 012 A.Y 2008-09 ORDER DATED 17/10/2017 AND ITA NO. 1998 & 2566/DEL/2016 F OR A.Y 2011-12 ORDER DATED 28/6/2018). 6. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER BUT COULD NOT CONTROVERT THE DECISIONS OF THE TRIBUNAL FOR ASSESS MENT YEAR 2008-09 AND 2011-12 IN THE ASSESSEES OWN CASE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE TRIBUNAL IN ASSESSMENT YEAR 2011-12 IN ASSESSEES OWN CASE HELD AS UNDER:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. AS FAR AS THE ISSUE OF DISALLOW ANCE OF INTEREST U/S 36(L)(III) OF THE ACT IS CONCERNED, WE FIND THAT TH E LD. CIT (A) HAS DISCUSSED 3 ITA NO. 3734/DEL/2015 THE ISSUE AT LENGTH IN PARAGRAPH 3.2 OF THE IMPUGNE D ORDER WHEREIN HE HAS GIVEN A CATEGORICAL FINDING THAT THE LOANS AND ADVA NCES INCLUDE INVESTMENT IN IMMOVABLE PROPERTY WHICH WAS PART OF THE BUSINES S ACTIVITY OF THE ASSESSEE. IT HAS BEEN FURTHER RECORDED BY THE LD. C IT (A) THAT THE INVESTMENT IN THE PARTNERSHIP FIRM WAS MADE EXCLUSI VELY FOR THE PURPOSE OF THE BUSINESS. IT HAS ALSO BEEN NOTED BY THE LD. CIT (A) THAT THE ADVANCES RECOVERABLE AND FORWARD-COVER RECEIVABLE INCLUDED I N THE ADVANCES ARE BUSINESS ADVANCES AND HAVE BEEN GIVEN TO SUPPLIERS WITH WHOM REGULAR BUSINESS TRANSACTIONS ARE UNDER TAKEN. SIMILARLY WI TH RESPECT TO THE ADVANCE GIVEN TO DLF LTD., THE LD. CIT (A) HAS NOTE D THAT THE SAME HAS ALSO BEEN GIVEN FOR THE PURPOSE OF BUSINESS. THE LD . CIT (A) HAS ALSO NOTED THAT APART FROM THESE ADVANCES, THERE WERE OTHER AD VANCES ALSO BUT ON WHICH INTEREST HAS DULY BEEN CHARGED BY THE ASSESSE E. THE LD. CIT (A) HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF S.A. BUILDERS LTD. REPORTED IN 288 ITR 1 WHEREIN THE HONBLE APEX COURT HAD HELD THAT AN EXPENDITURE MAY NOT HAVE BEEN INCU RRED UNDER ANY LEGAL OBJECTION BUT YET IT IS ALLOWABLE AS A BUSINESS EXP ENDITURE IF IT WAS INCURRED ON THE GROUNDS OF COMMERCIAL EXPEDIENCY. W E NOTE THAT THE HONBLE APEX COURT HAS ALSO OBSERVED THAT THE EXPRE SSION COMMERCIAL EXPEDIENCY IS AN EXPRESSION OF WIDE IMPORT AND INC LUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN INCURS FOR THE PURPOSE OF BUSINESS. THE LD. CIT (A) HAS ALSO REFERRED TO THE JUDGMENT OF HONBLE DE LHI HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT (PVT.) LTD. REPORTED IN 254 ITR 377 WHEREIN IT HAD BEEN HELD BY THE HONBLE HIGH COURT THAT ONC E IT WAS ESTABLISHED THAT THERE WAS A NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF BUSINESS, THE REVENUE CANNOT JUSTIFIABLY CLAIM TO P UT ITSELF IN THE ARMCHAIR OF THE BUSINESSMAN AND TAKE UP THE ROLE TO DECIDE A S TO HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMS TANCES OF THE CASE. THEREAFTER, THE LD. CIT (A) HAS GIVEN A CATEGORICAL FINDING THAT IN THE INSTANT CASE THE LOANS AND ADVANCES HAVE BEEN GIVEN ON ACCOUNT OF COMMERCIAL EXPEDIENCY. THE LD. SR. DEPARTMENTAL REP RESENTATIVE COULD NOT 4 ITA NO. 3734/DEL/2015 POINT OUT ANY FACTUAL INACCURACY IN THE FINDINGS OF THE LD. CIT (A) NOR COULD SHE POINT OUT HOW THE IMPUGNED ORDER WAS NOT LEGALL Y SUSTAINABLE. ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH TH E FINDINGS OF THE LD. CIT (A) ON THIS ISSUE AND WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 5.1. THUS, THE APPEAL OF THE DEPARTMENT STANDS DIS MISSED. THE ISSUE IN THE PRESENT YEAR IS IDENTICAL TO THE ASSESSMENT YEAR 2008- 09 AS WELL AS 2011-12. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE CIT (A). THE APPEAL OF THE REVENUE IS DISMISSE D. 9. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JULY, 2018 . SD/- SD/- (P. M. JAGTAP) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 13/07/2018 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 3734/DEL/2015 DATE OF DICTATION 12.07.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.07.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 3 .07.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 3 .07.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 3 .07.2018 DATE ON WHICH THE FILE GOES T O THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER
