DEPUTY COMMISSIONER OF INCOME TAX(CIRCLE)-6(2)(1), MUMBAI V. CLOVER DEVELOPERS PRIVATE LIMITED , MUMBAI

ITA 4786/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6790 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Depreciation; TDS; Set aside
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 4786 / M/ 20 1 7 ( ASSESSMENT YEAR : 2009 - 10 ) DCIT (CIR) - 6(2)(1) R. NO.563, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 20 . VS. M/S. CLOVER DEVELOPERS PVT. LTD. FLAT NO. 12, 1 ST FLOOR, PLOT NO.541/C, ASHOK BUILDING, EDENWALA ROAD, MATUNGA, MUMBAI - 400013. ./ ./ PAN/GIR NO. : AAACG1952B ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 26 . 0 2 .201 9 DATE OF PRONOUNCEMENT : 24. 04 . 201 9 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 12 . 0 4 .201 7 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 12 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2009 - 10 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.76,04,210/ - ON ACCOUNT OF CAPITALIZATION OF INTEREST IGNORING THE FACTS THAT THE ASSESSEE BY: SHRI K. GOPAL/ MS. NEHA PARANJPE (AR) DEPARTMENT BY: SHRI ABI RAMA KARTIKIYEN (DR) ITA. NO. 4786 /M/201 7 A.Y. 2009 - 10 2 AO HAS PASSED A SPEAKING ORDER ON THE DIRECTIONS GIVEN BY HON BLE ITAT. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND, WHICH MAY BE NECESSARY. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 . 09 .20 09 FOR THE A.Y. 2009 - 10 DECLARING LOSS TO THE TUNE OF RS.1,58,48,154/ - . THEREAFTER, THE ASSESSMENT OF THE ASSESSEE WAS CONCLUDED U/S143(3) OF THE ACT ON 14.12.2011 ASSES SING THE TOTAL INCOME IN SUM OF RS.1,42,84,600/ - AFTER CAPITALIZING INTEREST TOWARDS OFFICE BUILDING (CAPITAL WIP) AMOUNTING TO RS.1,02,87,081/ - AND NOT ALLOWED DEPRECIATION OF RS.77,95,403/ - . THEREFORE, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO C ONFIRMED THE ACTION OF THE AO IN CAPITALIZING THE COST OF CONSTRUCTION TO THE WIP WAS UPHELD. SO FAR AS THE DEPRECIATION IS CONCERNED , THE AO DIRECTED WAS DIRECTED TO DISPOSED OF ASSESSEES APPLICATION U/S 154 OF THE ACT. THEREAFTER, THE ASSESSEE FILED AN APPEAL BEFORE THE HONBLE ITAT AND HONBLE ITAT VIDE ORDER DATED 24.01.2014 DISPOSED OFF THE APPEAL OF THE ASSESSEE IN ITA. NO.4073/M/2013 AND HONBLE ITAT HAS DIRECTED TO RE - ASSESS THE INTEREST/COMPUTATION/CALCULATION AND DECIDE THE CASE ON MERITS. THEREA FTER, THE NOTICE WAS GIVEN AND THE PERCENTAGE WAS APPLIED TO THE COST OF INTEREST CLAIM IN SUM OF RS.1,02,87,081/ - WHICH WAS WORKED OUT TO THE TUNE OF RS.76,04,210/ - AND ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF ITA. NO. 4786 /M/201 7 A.Y. 2009 - 10 3 RS.64,77,153/ - . FEELING AGGRIEVED, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAI M OF THE ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 & 2 4 . ALL THE ISSUES ARE INTER - CONNECTED , THEREFORE, ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.76,04,210/ - ON ACCOUNT OF CAPITALIZATION OF INTEREST. THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY WHILE DECIDING THE GROUNDS NO. 3. THE RELEVANT FINDING IS HEREBY REPRODUCED AS UNDER.: - I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORD ER AND THE APPELLANT'S SUBMISSIONS. IT IS SEEN THAT THE A.O. HAS ERRED IN NOT CARRYING OUT THE DIRECTIONS OF THE HON. MUMBAI ITAT (ORDER DATED 24.1.2014 IN ITA NO. 4073/M/13) IN APPELLANT'S OWN CASE FOR A.Y. 2009 - 10 (I.E. THE PRESENT APPEAL). THE APPELLANT HAD CLAIMED RS.1,02,87,081/ - AS INTEREST. THE A.O. HOWEVER CAPITALIZED THE AMOUNT AT RS.76,04,210/ - . THE CIT(A) UPHELD THE ADDITION ON ACCOUNT OF CAPITALIZATION. ON APPEAL TO I - HONBLE TRIBUNAL, THE HON'BLE TRIBUNAL ACCEPTED - THE CONTENTION OF THE APPELLA NT WITH CERTAIN DISCRETION. THE TOTAL INTEREST CLAIMED FOR THE RELEVANT YEAR WAS RS.1,02,87,081/ - . THE BREAK - UP OF THE SAID INTEREST IS AS UNDER: INTEREST PAID ON UNSECURED LOAN NAME OF THE PARTY DIAM ORGANIC CHEMICAL INDUSTRIES 1,500,000 MANIBEN LALJI 933,822 MEENA D. NANDU 401,820 POPATLAL BHANJI (HUF) 110,959 ROMIL D. NANDU 110,959 SANDRA BHANSALI 113,425 INTEREST ON TDS 3,090 DHIREN P. NANDU 1750,027 INTEREST ON SECURED LOAN WINDMILL 52,23,307 BANK CHARGES1,34,491 ITA. NO. 4786 /M/201 7 A.Y. 2009 - 10 4 OTHER : INTEREST TO BANK, 5,181 TOTAL INTEREST AS PER PROFIT AND LOSS ACCO UNT 1,02,87,081 THE A.O. WAS GIVEN DIRECTION BY HON'BLE TRIBUNAL TO CONSIDER INTEREST ON LOAN FO R WINDMILL, BANK CHARGES AND INTEREST RECEIVED TO ARRIVE AT THE FIGURE FOR CAPITALIZATION OF INTEREST. THEREFORE, IN VIEW OF THE SAID DIRECTIONS, INTEREST FOR THE PURPOSE OF CAPITALIZATION COMES TO RS. 29,48,852/ - WHICH IS AS UNDER: TOTAL FINANCIAL COST A 1,02,87,081/ - LESS: INTEREST ON WINDMILL 52,23,307 BANK CHARGES 1,34,491 INTEREST RECEIVED FROM OTHERS 19,80,431/ - B 73,38,229 GROSS INTEREST FOR CALCULATION OF CAPITALIZATION (A - B) 29,48,852/ - SO AS DIRECTED BY HONBLE ITAT THE AO IS T O TAKE THE INTEREST AT RS.29,48,852/ - FOR CAPITALIZATION CALCULATION. IT IS ALSO SEEN THAT AS PER SCHEDULE 3 OF THE BALANCE - SHEET, THE SECURED LOANS HAVE BEEN TAKEN FOR WINDMILL AND INTEREST PAID AGAINST IT. GROUND NO.3 OF THE APPEAL IS PARTLY ALLOWED. 5. ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE HONBLE ITAT HAS ALREADY DIRECTED THE AO TO NET OFF THE INTEREST AFTER DUE CALCULATION/COMPUTATION. THE AO FAILED TO COMPLY THE DIRECTION IN PROPER MANNER, THEREFORE, THE APPEAL FILED BEFORE TH E CIT(A). THE CIT(A) HAS CONSIDERED THE EACH AND EVERY FACTS OF THE CASE AND IN THIS REGARD T HE CALCULATION HAS BEEN MENTIONED ABOVE AND CAPITALIZED THE INTEREST TO THE TUNE OF RS.29,48,852/ - . THE COMPUTATION NOWHERE SEEMS FOUND WRONG AND THE ISSUE IS PURE LY FACTUAL IN NATURE. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS AP PELLATE STAGE. ITA. NO. 4786 /M/201 7 A.Y. 2009 - 10 5 ACCORDINGLY, THE SE ISSUE S ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . 6 . IN RESULT, APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMISSED . ORDER P RONOUNCED IN THE OPEN COURT ON 2 4 . 04 .2019 . S D / - S D / - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 2 4 . 04 .2019 V IJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI