DCIT CIR 6(3)(2), MUMBAI V. JINDAL COMBINES PRIVATE LIMITED, MUMBAI

ITA 4814/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6802 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4814/MUM/2017 ASSESSMENT YEAR: 2012 - 13 & ITA NO. 4815/MUM/2017 ASSESSMENT YEAR: 2013 - 14 DCIT, CIR. 6(3)(2), MUMBAI R OOM NO. 522, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. VS. M/S JINDAL COMBINES PVT. LTD. 1101, GIRNAR BUILDING 68, TARDEO ROAD, OPP. FILM CENTRE, MUMBAI - 400034. PAN NO. AABCJ0861E APPELLANT RESPONDENT REVENUE BY : MR.RAJEEV GUBGOTRA, DR ASSESSEE BY : MR. VIJAY MEHTA, AR DATE OF HEARING : 05/12 /2018 DATE OF PRONOUNCEMENT: 28/02/2019 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 2 , MUMBAI [IN SHORT CIT(A) ] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSU ES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. FACTS BEING IDENTICAL, WE BEGIN WITH THE AY 2012 - 13. JINDAL COMBINES ITA NOS. 4814 & 4815/MUM/2017 2 2. THE 1 ST & 2 ND GROUND OF APPEAL 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,73,34,106/ - ON ACCOUNT OF INTEREST EXPENSES U/S 24(B), PERTAINING TO ACQUISITION OF PROPERTY AND DIRECTING THE AO TO WORK OUT THE INTEREST EXPENSES AND BY MERELY BASING ON STAND TAKEN BY THE AO IN A.Y. 2010 - 11 TOTALLY IGNORING THAT EACH YEAR CONSTITUTES A SEPARATE ASSESSMENT UNIT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,73,34,106/ - ON ACCOUNT OF INTEREST EXPENSES U/S 24(B), PERTAINING TO ACQUISITION OF PROPERTY AND DIRECTING THE AO TO WORK OUT THE INTEREST EXPENSES AND FAILING TO APPRECIATE THAT THE A SSESSMENT O RDER FOR A. Y. 2010 - 11 IS NOT BEING CONSIDERED CORRECT AND IN ACCORDANCE WITH FACTS AND IN LAW AND IS SU BJECT TO REOPENING/REVISI ON ON T HIS VERY ISSUE. 3. THE ABOVE GROUNDS OF APPEAL RELATE TO THE DISALLOWANCE OF INTEREST EXPENSES OF RS.4,73,34,106/ - BY THE AO WHICH IS CLAIMED BY THE ASSESSEE TO BE ALLOWABLE U/S 24(B) OF THE ACT. THE ASSESSEE IS ENGAGED INTER - ALIA IN THE LETTING OUT OF THE PROPERTY. IT OWNS A BUILDING KNOWN AS JCPL TOWERS SITUATED AT GURGAON WHICH WAS CONSTRUCTED BY IT . DURING THE YEAR UNDER CONSIDERATION, IT HAD PAID TOTAL INTEREST OF RS.5,73,34,106/ - ON THE LOAN TAKEN FROM HOUSING DEVELOPMENT FIN ANCE CORPORATION LTD (HDFC) AND LATER ON PAID THIS LOAN BY TAKING A LOAN FROM INDIABULLS LTD. DURING THE IMPUGNED ASSESSMENT YEAR. THE LOAN WAS TAKEN FOR FUNDING THE CONSTRUCTION OF PROPERTY IN GURGAON, HARYANA, THE INCOME FROM WHICH HAS BEEN OFFERED TO TA X UNDER THE HEAD I NCOME FROM H OUSE P ROPERTY. THE ASSESSEE APPROPRIATED INTEREST OF RS.4,73,34,106/ - TOWARDS THE BUILDING AND OTHER INTEGRATED FACILITIES AND CLAIMED THE SAME AS A DEDUCTION AGAINST JINDAL COMBINES ITA NOS. 4814 & 4815/MUM/2017 3 THE INCOME FROM HOUSE PROPERTY U/S 24(B) OF THE ACT. HOWE VER, THE AO DISALLOWED THE ENTIRE INTEREST EXPENDITURE U/S 24(B) OF THE ACT. 4. IN APPEAL, THE LD. CIT(A) VIDE ORDER DATED 18.04.2017 HAS HELD AS UNDER: IN THE INSTANT CASE, THE APPELLANT HAS BORROWED THE LOAN IN THE NAME OF M/S ESSAR INVESTMENT LTD. WHICH IS TAKEN FOR DIFFERENT PURPOSE. THERE WAS NOT ANY SPECIFIED UTILIZATION CLAUSE FOR THE AMOUNT BORROWED FOR THE PURPOSE OF ACQUIRED PROPERTY. THE APPELLANT CLAIMED THE INTEREST ON BORROWED CAPITAL YEAR AFTER YEAR WITHOUT SPECIFYING THE REPAYMENT OF PR INCIP AL AMOUNT AS WELL AS INTEREST ON CAPITAL BORROWED. IN VIEW OF THE SECTION 24(B) THE APPELLANT SHOULD HAVE FURNISHED THE CERTIFICATE FROM THE BORROWER SPECIFYING THE AMOUNT OF INTEREST PAYABLE BY THE APPELLANT FOR THE PURPOSE OF SUCH ACQUISITION OR CON STRUCTION OF THE PROPERTY OR CONVERSION OF THE WHOLE OR ANY PART OF THE CAPITAL BORROWED WHICH REMAINS TO BE REPAID AS A NEW LOAN. BUT NO SUCH CERTIFICATE WAS FURNISHED BY THE APPELLANT EITHER DURING ASSESSMENT PROCEEDINGS OR DURING APPELLA T E PROCEEDING. THE INTENTION OF THE APPELLANT IS THAT IT WANTS TO TAKE BENEFIT OF THE INTEREST ON CAPITAL BORROWED YEAR AFTER YEAR WITHOUT SHOWING THE REPAYMENT OF PRINCIP AL COMPONENT AGAINST THE CAPITAL BORROWED FOR ACQUISITION OF PROPERTY. THE SANCTION OF NEW LOAN IS NOT FOR SPECIFIC PURPOSE OF REPAYMENT OF BORROWED CAPITAL OF HDFC, BUT FOR THE PURPOSE OF WORKING CAPITAL REQUIREMENT. BUT, IT IS A FACT THAT THE APPELLANT HA S ACQUIRED THE PROPERTY FROM THE BORROWED CAPITAL FROM HDFC BANK. THEREFORE AO IS DIRECTED TO WORK OUT, AFTER ENQUIRING WITH INDIABULLS, THE INTEREST AS WELL AS PRINCIP A L COMPONENT ON FUND OF RS.31,11,60,416/ - AT THE PRESCRIBED RATE OF INTEREST OF INDIABUL LS AS PER TERM & CONDITION FOR 10 YEARS (TENURE IS 10 YEARS AS PER SANCTION LETTER) AND ALLOW THE INTEREST PORTION ACCORDINGLY. BY THIS WAY THE INTEREST WILL BE JINDAL COMBINES ITA NOS. 4814 & 4815/MUM/2017 4 REDUCED AND PRINCIP A L PAYMENT WILL BECOME NIL AFTER TEN YEARS. THIS WILL GIVE JUSTICE TO BOTH T HE PARTIES. 5. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE AO AND SUBMITS THAT THE SAME BE RESTORED. ON THE OTHER HAND, IT IS THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE THAT SINCE THE CIT(A) HAS GIVEN A DIRECTION TO THE AO, THERE SHOULD NOT BE ANY GRIEVANCE BY THE REVENUE. 6. THE 3 RD GROUND OF APPEAL ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO AO VERIFY WHETHER THE FUND WAS BORROWED FUND ON WHICH THE ADDITION OF RS.27,26,887/ - ON ACCOUNT OF INTEREST EXPENSES U/S 57 OF THE ACT WAS MADE AND IGNORING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF M/S V P GOPINATHAN 248 1TR 449 WHERE IT IS VERY CLEAR ON THIS ISSUE AND WHICH HAS NOT BEEN REBUTTED BY LD. CIT(A). 7. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED INTEREST INCOME OF RS.27,26,887/ - ON THE INTER - CORPORATE DEPOSIT. THE SAID DEPOSIT WAS MADE OUT OF INTEREST BEARING BORROWINGS, THE INTEREST THEREON WAS CLAIMED AGAINST THE INTEREST INCOME U/S 57 OF THE ACT, AGAINST WHICH THE ASSESSEE HAS CLAIMED COST OF INTEREST U/S 57 TO THE TUNE OF INTEREST INCOME ONLY. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE CLAIM OF THE ASSESSEE AND MADE DISALLOWANCE OF RS.27,26,887/ - . 8 . IN APPEAL, THE LD. CIT(A) VIDE ORDER DATED 18.04.2017 HELD AT PARA 8.2 AS UNDER: JINDAL COMBINES ITA NOS. 4814 & 4815/MUM/2017 5 8.2 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. IT IS A FACT THAT THE APPELLANT HAS GIVEN INTER CORPORATE DEPOSIT OF RS.9,01,97,981/ - TO EQUINOX BUSINESS PARKS PVT. LTD. ON 25.10.2011 I.E. DURING THE FY 2011 - 12. THE APPELLANT CLAIMED THAT IT HAS MADE PAYMENT OF RS.9,01,97,981/ - OUT OF BORROWING CAPITAL FROM INDIABULLS FINANCIAL SERVICES LTD. THE APPELLANT VIDE ANNEXURE D ALSO FURNISHED THE LEDGER COPY OF ACCOUNT WITH EQUNO BUSINESS PARK PVT. LTD. WHEREIN IT IS SEEN THAT THE APPELLANT HAD MADE THE PAYMENT ON 25.10.2011 VIDE CHEQUE NO .673028 OF RS.9,01,97,981/ - . BUT IT IS SEEN THAT THE APPELLANT HAS NOT FURNISHED THE DIRECT EVIDENCE TO SUBSTANTIATE THAT THE PAYMEN T WAS MADE OUT OF THE BORROWED FUND FROM INDIABULLS. FURTHER, IT IS SEEN THAT THIS VITAL FACT IS NOT VERIFIED BY THE AO. THEREFORE, AO IS DIRECTED TO VERIFY WHETHER THE FUND GIVEN EBPPL WAS THE BORROWED FUND FROM INDIABULLS. IF IT IS BORROWED FUND THEN AO IS DIRECTED TO ALLOW THE CLAIM OF INTEREST EXPENSES OF THE APPELLANT. 9 . BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE AO AND SUBMITS THAT THE SAME BE RESTORED. ON THE OTHER HAND, IT IS THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE THAT SINCE THE LD. CIT(A) HAS GIVEN A DIRECTION TO THE AO, THERE SHOULD NOT BE ANY GRIEVANCE BY THE REVENUE. 10 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN CASE OF THE 1 ST & 2 ND GROUND OF APPEAL, THE LD. CIT(A) HAS MENTIONE D AT PARA 7.2 OF THE IMPUGNED ORDER THAT FOR THE AY 2010 - 11, THE CIT(A) HAS ALLOWED THE ASSESSEES APPEAL ON SIMILAR GROUND, WHICH HAS BEEN CONFIRMED BY THE ITAT VIDE ITA NO 1566/MUM/2015 DATED 25.01.2017. JINDAL COMBINES ITA NOS. 4814 & 4815/MUM/2017 6 AS MENTIONED EARLIER AT PARA 4 & 8 , THE LD. CIT (A) HAS GIVEN A SPECIFIC DIRECTION TO THE AO TO EXAMINE AND VERIFY THE ISSUES PERTINENT TO THE GROUNDS OF APPEAL . THEREFORE, WE UPHOLD THE ORDER OF THE LD. CIT(A). FACTS BEING IDENTICAL, OUR DECISION FOR A.Y. 2012 - 13 APPLIES MUTATIS MUTANDIS TO A.Y. 2013 - 14. 1 1 . IN THE RESULT , THE APPEAL S ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/02/2019. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 28/02/2019 RAHUL SHARMA, SR. P.S. 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// (SR. PRIVATE SECRETARY) ITAT, MUMBAI