Gujarat Metro Rail Corporation (GMRC) Limited , Gandhinagar V. The Pr. CIT, Ahmedabad-3, Ahmedabad

ITA 397/AHD/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 2855 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-02-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 21-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DA RSI SUMAN RATNAM; INTHELIGHTTOABOVEDISCUSSIONIAM; THEREFORE; OFTHEOPINIONTHATTHEASSESSMENTORDER
• Assessee Lawyers: SHRISNSOPARKAR; .ADVOCATEWITH; OBSERVINGTHATTHEASSESSEEHASFURNISHED

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’D’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRITRSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं./ITANo.397/AHD/2023 धििाधरणवरध / Asstt.Year:2018-2019 GujaratMetroRailCorporation (GMRC)Limited, BlockNo.1, FirstFloor, Kar,yogiBhavan, Sector10A, Gandhinagar-382010. PAN:AAGCM3807M Vs. PrincipalCommissionerof IncomeTax, Ahmedabad-3, Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriSNSoparkar,Sr.Advocatewith ShriParinShah,AR Revenueby:Dr.DarsiSumanRatnam,CIT.D.R सुिवाईकीतारीख/DateofHearing:21/02/2024 घोरणाकीतारीख/DateofPronouncement:06/03/2024 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedPrincipalCommissionerofIncomeTax,Ahmedabad-3, arisinginthematterofassessmentorderpassedunders.263oftheIncomeTax Act,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear 2018-2019. ITAno.397/AHD/2023 A.Y.2018-19 2 2.TheonlygrievanceraisedbytheassesseeisthattheLd.PCITerredin holdingtheassessmentframedu/s143(3)oftheAct,aserroneousinsofar prejudicialtotheinterestofRevenue. 3.Thenecessaryfactsarethattheassesseeinthepresentcase,alimited company,isengagedinthebusinessofconstructionandmaintenanceofroads, rail,bridges,tunnels,ports,harbor,runwaysetc.Theassesseefiledthereturnof incomedeclaringanincomeofRs.Nil.However,theassessmentwasframedu/s 143(3)oftheAct,dated25/03/2021,aftermakingadditionofinterestincomeof Rs.14,57,73,748/-onlywhichwasset-offagainstthelossofRs.24,61,522and resultantlytheincomewasassessedatRs.14,33,12,226/-only. 4.TheLd.PCITonexaminationofcaserecordsfoundthattheasseseehas borrowedmoneyRs.213.68lakhsandincurredinterestexpensesagainstthe borrowedamountatRs.46,00,700/-only.AspertheLd.PCIT,suchamountwas claimedasrevenueexpensewhereasthesamedeservestobecapitalizedinthe FinancialStatement.ButtheAOhasnotverifiedthisaspectduringtheassessment proceedings.Accordingly,ashow-causenoticewasissuedtotheassesseeseeking clarification.Theassesseevideletterdated04/03/2023submittedthatthe impugnedamountofinteresthasalreadybeencapitalizedinthebooksofaccount. Tothiseffect,theassesseefiledthecopyoftheFinancialStatement demonstratingthattheinterestwascapitalized.However,theLd.PCITdisagreed withthecontentionsoftheassesseebyobservingthattheassesseehasfurnished partialinformation.AspertheLd.PCIT,theasseseehasnotfurnishedthefull detailsandthereforetheLd.PCITheldtheassessmentorderaserroneousinso farprejudicialtotheinterestoftherevenuebyholdingunder: InthelighttoabovediscussionIam,therefore,oftheopinionthattheassessmentorder passedbytheAOu/s.143(3)oftheActdated25.03.2021iserroneousandprejudicialto theinterestoftherevenue.Byvirtueofthepowersvestedinmeu/s.263oftheITAct,I herebyset-asidetheorderu/s.143(3)oftheActdated09.11.2020ontheissuesdiscussed above.TheAOisdirectedtomakeproperinquiriesinrelationtotheborrowingcostofRs. 213.68lakhsandexceptionalitemsclaimedbytheassessee.Penaltyproceedingsaretobe ITAno.397/AHD/2023 A.Y.2018-19 3 initiatedseparatelyforissueswhereadditionsaremadeduringtheassessment proceedings. 5.BeingaggrievedbytheorderofthelearnedPCIT,theassesseeisinappeal beforeus. 6.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to70and drewourattentiontotheFinancialStatementsplacedatpages24,36,43&62of thepaperbookdemonstratingthatinteresthasalreadybeencapitalizedand thereforetheassessmentordercannotbesubjecttorevisionu/s263oftheActon accountofnon-capitalizationofinterest. 6.1TheLd.ARfurthersubmittedthattherewasnoshow-causenoticeissued bytheLd.PCITwithrespecttoexceptionalitemsshownbytheassesseeinthe incometaxreturn.AspertheLd.AR,theLd.PCIThasdirectlyheldtheorderof theAOaserroneousinsofarprejudicialtotheinterestoftherevenueinrespect ofexceptionalitemswithoutissuinganyshow-causenoticewhichisagainstthe provisionsoflaw.Thus,itwascontendedbytheLd.ARthatonthiscountalone theassessmentcannotberevisedu/s263oftheAct.TheLd.ARinsupportofhis contentionreliedonthejudgmentoftheHon’bleBombayHighCourtinthecase ofUniversalMusicIndiaPvt.Ltd.Vs.PCITreportedin155taxmann.com230 whichwasalsoupheldbythejudgmentoftheHon’bleSCreportedin155 taxmann.com231. 7.Ontheotherhand,theLd.DRcontendedthattheinterestcostwaspartof theexceptionalitemsandthereforeitcannotbesaidthattherewasnonotice issuedwithrespecttotheexceptionalitems.Likewise,theassesseehasnot furnishedfullinformationdemonstratingthattheinterestonthissubordinateloan hasbeencapitalized.TheLd.DRvehementlysupportedtheorderofthe authoritiesbelow. ITAno.397/AHD/2023 A.Y.2018-19 4 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Regardingtheexceptionalitems,wenotethatthere wasnoshow-causenoticeissuedbytheLd.PCITandthereforethesamecannot bemadesubjecttotherevisionintheproceedingscarriedoutu/s263oftheAct. Inthisregard,wedrawsupportandguidancefromthejudgmentofHon’ble BombayHighCourtinthecaseofUniversalMusicIndia(P)Ltd.(Supra)whereinit washeldasunder: 9.Inthecaseathand,thereisafindingbytheTribunal,asnotedearlier,thatnoissue wasraisedbytheCITinrespectofparticularsofpaymentmadetopersonsspecified undersection40A(2)(b)oftheActandeventheshowcausenoticeissilentaboutthat. 10.Inourview,theTribunalhasnotcommittedanyperversityorappliedincorrect principlestothegivenfactsandwhenthefactsandcircumstancesareproperlyanalysed andcorrecttestisappliedtodecidetheissueathand,then,wedonotthinkthatquestion aspressedraisesanysubstantialquestionoflaw. 8.1Withrespecttothecapitalizationoftheinterest,wehavereferredtoprofit, andlossaccountplacedonpages23and36ofthepaperbooksandnotethat suchinteresthasalreadybeencapitalizedinthebooksofaccountsofthe assessee.Therefore,weareoftheviewthatonthiscountaswelltheassessment ordercannotbeheldaserroneousinsofarprejudicialtotheinterestofthe revenue.Inviewoftheabove,weholdthattheorderpassedbytheLd.PCITu/s 263oftheAct,isnotsustainableandaccordinglywequashthesame.Hence,the groundofappealoftheassesseeisherebyallowed. 9.Intheresult,theappealfiledbytheassesseeisherebyallowed. OrderpronouncedintheCourton06/03/2024atAhmedabad. Sd/- Sd/-Sd/- (TRSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated06/03/2024 Manish