GAUTAM PREMISES P. LTD, MUMBAI V. ITO WD 2(1)(4), MUMBAI

ITA 4034/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1036 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 02-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: RAHUL K HAKANI
• Keywords: Business income; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 4034 / MUM/20 17 ( ASSESSMENT YEAR 2012 - 13 ) M/S. GAUTAM PREMISES PVT. LTD., RUPAM BUILDING R.NO.1, GROUND FLOOR, 239 P.D.MELLO ROAD VICTORIA TERMINUS MUMBAI 40 0 001 VS. ITO WD 2(1)(4), MUMBAI 400 020 PAN/GIR NO. AABCG1676L APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI RAHUL K. HAKANI REVENUE BY MS. N. HEMALATHA DATE OF HEARING 05 / 10 /201 7 DATE OF PRONOUNCEME NT 02 / 01 /20 1 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 3, MUMBAI DATED 30/03/2017 FOR A.Y.2012 - 13 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKE N BY THE ASSESSEE: - 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ASSESSMENT ORDER WITHOUT CONSIDERING THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE ITAT AND CIT(A) ORDER OF EARLIER YEARS IN ASSESSEE OWN CASE AND HENCE ORDER OF THE LEARNED CIT(A) M AY BE QUASHED. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWAN CE OF INTEREST OF RS. 39,66,140/ - WITHOUT APPRECIATING THAT THE INTEREST EXPENSES ARE INCURRED FOR THE PURPOSES OF BUSINESS AND HENCE, THE SAID INTEREST EXPENDITURE BE ALLOWED AS A DE DUCTION. IN DOING SO THE CIT(A) HAS NOT CONSIDERED THE SUBMISSIONS OF THE APPELLANT SUPPORTED BY COPIES OF DOCUMENTS AND OTHER RELEVANT PAPERS PRODUCED AND SUBMITTED DURING THE COURSE OF HEARING. ITA NO. 4034/MUM/2017 M/S. GAUTAM PREMISES PVT. LTD., 2 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELL ANT IS NOT ENTITLED TO SET OFF CURRENT YEAR'S BUSINESS LOSS CONFIRMING ORDER OF THE A.O. AND NOT ALLOWING SET OFF OF BUSINESS LOSS FROM OTHER INCOME. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE COMPANY WAS INCORPORATED ON 6/11/1986 WITH THE OBJECT OF CARRYING ON REAL ESTATE BUSINESS AND OTHER RELATED ACTIVITIES. IN EARLIER A.Y. 2007 - 08, ASS ESSEE ENTERED INTO JOINT VENTURE AGREEMENT WITH M/S. RAS RESORTS AND APART HOTELS LTD FOR DEVELOPMENT OF PROPERTY AT GOA . ASSESSEE ADVANCE RS 2 CRORES TOWARDS THE JOINT VENTURE PROJECT BY BORROWING FROM ALLAHABAD BANK. APPLICATION FOR LOAN AND SANCTION LET TER . ALL DIRECT EXPENSES CONNECTED WITH THE PROJECT WERE CAPITALISED. ADMINISTRATIVE EXPENSES WERE CLAIM AS REVENUE EXPENSES. 4. IN THE A.Y.2009 - 10, AO DISALLOWED THE EXPENSES ADMINISTRATIVE AND FINANCIAL ON THE GROUND THAT THERE WAS NO BUSINESS INCOME DUR ING THE YEAR AND NO BUSINESS WAS CARRIED OUT. SIMILAR DISALLOWANCES WERE MADE IN AY 20 10 - 11 AND 20 11 - 12. ALSO FOR AY 08 - 09 THERE WAS S.263 ORDER. THE ORDERS OF AO HAVE BEEN REVERSED BY ITAT. 5. DURING THE RELEVANT A.Y. 20 12 - 13, ASSESSEE ENTERED INTO MOU DA TED 1/4/2011 WITH RAS DIU HOTELS PVT LTD TO CARRY OUT JOINT DEVELOPMENT IN THE STATE OF KARNATAKA. A.O. FOR RELEVANT YEAR FOLLOWING ORDERS OF EARLIER YEARS HELD THAT BORROWED FUNDS WERE GIVEN FOR NON - BUSINESS PURPOSES AND ASSESS E E HAD NO BUSINESS AND THUS DISALLOWED INTEREST PAID TO ALLAHABAD BANK OF RS . 39,66,140/ - . ITA NO. 4034/MUM/2017 M/S. GAUTAM PREMISES PVT. LTD., 3 6. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO. 7. AT THE OUTSET, LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL FOR THE A.Y.2009 - 10 DATED 13/07/2016, WHEREIN EXACTLY SI MILAR ISSUE WAS DEALT BY THE TRIBUNAL WITH REGARD TO DISALLOWANCE OF INTEREST AND ADMINISTRATIVE EXPENSES, WHEREIN THE MATTER WAS RESTORED BY THE TRIBUNAL AFTER HAVING THE PRECISE OBSERVATION: - 6. GROUND NO.2: THIS GROUND DEALS WITH THE DISALLOWANCE OF INT EREST OF RS.16,97,184/ - . 6.1. IN THIS REGARD, LD. COUNSEL HAS FILED PETITION UNDER RULE 29 FOR FILING ADDITIONAL EVIDENCES SHOWING UTILIZATION OF THE BANK OVERDRAFT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND REQUESTED FOR SENDING THIS ISSUE BACK TO TH E FILE OF THE AO. THE ASSESSEE HAS ALSO FILED THE COPY OF THE CERTIFIED COPY OF BANK STATEMENTS SHOWING UTILIZATION OF OVERDRAFT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IN OUR CONSIDERED VIEW, THESE EVIDENCES ARE CRUCIAL AND GO TO THE ROOT OF THE MATT ER AND THESE EVIDENCES ARE GENERATED FROM THE BANK AND CANNOT BE IGNORED OR SIMPLY BRUSHED ASIDE, THEREFORE, IN ALL FAIRNESS AND TO ME ET THE ENDS OF JUSTICE, WE ALLOW PETITION FILED U/R 29 AND SEND THIS ISSUE TO THE FILE OF THE AO TO DECIDE IT AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE AO SHALL LOOK INTO THESE DETAILS AND EVIDENCES BEFORE DECIDING THIS ISSUE AFRESH. THIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. DURING THE YEAR UNDER CONSIDERATION ALSO I FO UND THAT ASSESSEE HAS FILED STATEMENT SHOWING UTILIZATION OF THE BANK OVERDRAFT FOR THE PURPOSE OF BUSINESS. ACCORDINGLY, I RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER CONSIDERING THE EVIDENCE PLACED ON RECORD WITH REGARD TO UTI LIZATION OF BANK OVERDRAFT FOR THE PURPOSE OF BUSINESS. WE DIRECT ACCORDINGLY. 9. GROUND NO.3 WAS NOT PRESSED BY LEARNED AR. THE SAME IS THEREFORE, DISMISSED IN LIMINI AS NOT PRESSED. ITA NO. 4034/MUM/2017 M/S. GAUTAM PREMISES PVT. LTD., 4 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART IN TERMS IN DICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 02 / 01 /201 8 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 02 /01 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. RE GISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//