Jindal Reality Pvt. Limited, New Delhi V. DCIT, New Delhi

ITA 5057/DEL/2010

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9404 (ITAT-DELHI)
• Duration Of Justice: 9 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 16-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT JAIN
• Keywords: Business income; Business expenditure
• Section: 143(3); 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI , ! ' ' . . %&' ()*! BEFORE MS. SUSHMA CHOWLA, VP & SHRI N.K.BILLAIYA, AM [THROUGH VIDEO CONFERENCING] + / ITA NO.5057/DEL/2010 , - - /ASSESSMENT YEAR 2007-08 JINDAL REALITY PVT.LTD. FLAT NO.1104, 11 TH FLOOR, HEMKUNT CHAMBER, 89 TH NEHRU PLACE, NEW DELHI. PAN-AACCD2575L .......... ./ /APPELLANT VS THE DCIT, CIRCLE-4(1), NEW DELHI-110002. . 01./ / RESPONDENT ./23 / APPELLANT BY : SH. ROHIT JAIN, ADV. & SH. DEEPESH JAIN, CA 01./23 / RESPONDENT BY : SH. J.K.MISHRA, CIT DR + / ITA NO.1651/DEL/2016 , - - /ASSESSMENT YEAR 2008-09 JINDAL REALITY PVT.LTD. DSM-609-610, 6 TH FLOOR, DLF TOWER, SHIVAJI MARG, NAJAFGARH ROAD, MOTI NAGAR, NEW DELHI-110015. PAN-AACCD2575L .......... ./ /APPELLANT VS THE ITO, WARD-4(1), NEW DELHI. . 01./ / RESPONDENT 2 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 + / ITA NO.4340/DEL/2014 , - - /ASSESSMENT YEAR 2009-10 THE ITO, WARD-4(1), NEW DELHI .......... ./ /APPELLANT VS JINDAL REALITY PVT.LTD. FLAT NO.1104, 11 TH FLOOR, HEMKUNT CHAMBER, 89 TH NEHRU PLACE, NEW DELHI-110019. PAN-AACCD2575L . 01./ / RESPONDENT ./23 / APPELLANT BY : SH. SARAS KUMAR, SR.DR 01./23 / RESPONDENT BY : SH. ROHIT JAIN, ADV. & SH. DEEPESH JAIN, CA 24) / DATE OF HEARING : 20.07.2020 56 24) / DATE OF PRONOUNCEMENT: 18.08.2020 7 / ORDER PER SUSHMA CHOWLA,VP THE PRESENT THREE APPEALS FILED BY ASSESSEE AND THE REVENUE ARE AGAINST SEPARATE ORDERS OF CIT(A)-VII, NEW DELHI DATED 16.0 8.2010; CIT(A)-17, NEW DELHI DATED 22.01.2016; AND CIT(A)-VIII, NEW DELHI DATED 23.05.2014 RELATING TO ASSESSMENT YEARS 2007-08 TO 2009-10 RESPECTIVELY AGAINST THE ORDERS PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 ( IN SHORT THE ACT). 2. THE BUNCH OF APPEALS RELATING TO THE SAME ASSESS EE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IN ORDER TO ADJUDICATE THE ISSUE, WE FIRST TAKE UP THE APPEAL RELATING TO ASSESSMENT YEAR 2007-08. 3 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL RELATING TO ASSESSMENT YEAR 2007-08:- L. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)-V II, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN HOLDING THAT THE INTEREST EXPENDITURE OF RS. 59,43,36,188/- ON L OONS TAKEN FOR PURCHASE OF STOCK IN TRADE COMPRISING OF LAND SHOULD BE CAPI TALIZED AS WORK IN PROGRESS AND THE SAME ARE NOT ALLOWABLE AS EXPENDIT URE IN THE PRESENT YEAR FOLLOWING SPECIAL BENCH DECISION OF MUMBAI TRI BUNAL IN THE CASE OF WALL STREET CONSTRUCTION LTD. VS. JCIT(2006) 101 IT D 156( MUM.) (S6)/[2006] 102 TT J (MUMBAI) (SB). 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)-VI I, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN HOLDING THAT ADMINISTRATIVE AND STATUTORY NATURE OF EXPENDITURE ON ELECTRICITY & WATER CHARGES, INSURANCE, LEGAL & PROFESSIONAL CHARGES, A UDIT FEES, MISC. EXPENSES, TELEPHONE EXPENSES AND PRELIMINARY EXPENS ES TOTALING AT RS. 10,62,688 SHOULD BE CAPITALIZED AS WORK IN PROGRESS AND THE SAME ARE NOT ALLOWABLE AS EXPENDITURE IN THE PRESENT YEAR FOLLOW ING SPECIAL BENCH DECISION OF MUMBAI TRIBUNAL IN THE CASE OF WALL STR EET CONSTRUCTION LTD. VS. JCIT(2006) 101 ITD 156( MUM.)(SB)/[2006] 102 N J (M UMBAI) (SB). 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)-VI I, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE POINT THAT THE FACTS IN THE CASE B EFORE THE SPECIAL BENCH IN WALL STREET CONSTRUCTION CASE (SUPRA) ARE MATERIALL Y DIFFERENT FROM THE FACTS IN THE CASE OF THE APPELLANT COMPANY THUS RULING OU T APPLICATION OF SUCH CASE. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)- V II, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW IN RELATING THE INTEREST EARNINGS OF RS. 81,75,460- (R S.6,58,863/- FOR BANK INTEREST & RS. 75,16,597/- FOR INTEREST FROM LOANS & ADVANCES GIVEN TO VARIOUS PERSONS & CORPORATE BODIES) AS INCOME EARNE D FROM INVESTMENT OF SURPLUS FUNDS. 5. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)-VI I, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN JAW IN REFRAINING FROM ALLOWING SET OFF OF INTEREST INCOME AGAINST INTEREST EXPENDITURE ON ALTERNATIVE BASIS ESPECIALLY WHEN AM OUNTS ADVANCED AND THOSE PARKED WITH THE BONK REPRESENTED BORROWED FUN DS AND NOT SURPLUS FUNDS OF THE APPELLANT COMPANY. 6. THAT THE COMMISSIONER OF INCOME TAX (APPEALS)-VI I, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN DEVIATING FROM THE POINT OF REASONING GIVEN BY THE AO AND FUR THER THEREFORE ERRED IN 4 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 NOT ADJUDICATING KEY ISSUE IN RELATION TO THE POINT OF COMMENCEMENT OF BUSINESS OPERATIONS OF THE APPELLANT COMPANY. 4. THE GROUND OF APPEAL NO. 1 RAISED BY THE ASSESSE E IN ASSESSMENT YEAR 2007-08 IS AGAINST THE ORDER OF AUTHORITIES BELOW I N HOLDING THAT THE INTEREST EXPENDITURE OF RS.59,43,36,188/- ON LOANS TAKEN FOR PURCHASE OF STOCK IN TRADE COMPRISING OF LAND SHOULD BE CAPITALIZED AS WORK IN PROGRESS AND THE SAME ARE NOT ALLOWABLE AS EXPENDITURE IN THE PRESENT YEAR. 5. THE ISSUE RAISED IN THE GROUND OF APPEAL NOS. 2 AND 3 IS AGAINST THE DISALLOWANCE OF ADMINISTRATIVE AND OTHER EXPENDITUR E TOTALING TO RS.10,62,688/- SHOULD BE CAPITALIZED AS WORK IN PRO GRESS. 6. THE ISSUE RAISED IN THE GROUND OF APPEAL NOS. 4 AND 5 IS AGAINST THE SETTING OFF OF INTEREST INCOME AGAINST INTEREST EXP ENDITURE AS THE FUNDS WERE ADVANCED OUT OF BORROWED FUNDS ON WHICH INTEREST WA S BEING PAID. 7. THE ISSUE RAISED IN GROUND OF APPEAL NO.6 IS WHE THER OR NOT THE BUSINESS OPERATIONS OF THE ASSESSEE HAD COMMENCED OR NOT. 8. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE COMPANY WAS INCORPORATED ON 25.08.2005. THE OBJECT OF THE ASSESSEE CONCERN W AS TO CARRY ON THE BUSINESS OF REAL ESTATE. THE ASSESSEE HAD CLAIMED IN ASSESSM ENT YEAR 2006-07 THAT IT HAS COMMENCED ITS BUSINESS, ONCE IT HAD MADE INVEST MENT IN PURCHASE OF LAND FOR SETTING UP OF PROJECTS AT SONEPAT AND ALSO ADVA NCED MONEY FOR INVESTMENT IN PURCHASE OF MAN SINGH ROAD PROPERTY. WHILE COMPL ETING THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER HAD OBSERVED THAT THE ASSESSEE 5 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 HAD FAILED TO ADDUCE ANY EVIDENCE WITH REGARD TO CO MMENCEMENT OF ITS BUSINESS ACTIVITIES. FURTHER THE ASSESSEE HAD EARNE D INTEREST ON LOAN AND ADVANCES WHICH WERE GIVEN TO DIFFERENT ENTITIES AND ALSO BANK INTEREST ON FDRS, THE ASSESSING OFFICER HELD THAT SINCE NO BUSINESS A CTIVITY WAS CARRIED ON DURING THE YEAR, NO BUSINESS INCOME OR LOSS COULD BE COMPU TED IN THE HANDS OF THE ASSESSEE. HENCE, THE INTEREST INCOME WHICH WAS CLAI MED TO BE BUSINESS INCOME AND WAS SET OFF AGAINST INTEREST EXPENDITURE WAS A SSESSED AS INCOME FROM OTHER SOURCES AND NO BENEFIT OF INTEREST PAID WAS A LLOWED IN THE HANDS OF THE ASSESSEE. THE INTEREST EXPENDITURE WAS HELD TO BE P RE-OPERATIVE BUSINESS EXPENSES AND ALSO ADMINISTRATIVE EXPENSES CLAIMED B Y THE ASSESSEE FOR CARRYING ON THE BUSINESS, WERE ALSO NOT ALLOWED AS BUSINESS EXPENDITURE. 9. THE ASSESSING OFFICER DURING THE INSTANT ASSESSM ENT YEAR I.E. A.Y. 2007- 08, APPLIED THE SAME PRINCIPLE AS IN ASSESSMENT YEA R 2006-07 AND VIDE PARA 6 AND 7 HELD THAT THE BUSINESS OF THE ASSESSEE HAD N OT COMMENCED AND FURTHER TREATED THE INTEREST INCOME AS INCOME FROM OTHER SO URCES. HE DID NOT ALLOW SET OFF OF INTEREST EXPENDITURE AGAINST THE INTEREST IN COME AND ALL OTHER EXPENSES I.E. ADMINISTRATIVE AND OTHER EXPENSES WERE ALSO NO T ALLOWED IN THE HANDS OF THE ASSESSEE BEING PRE-OPERATIVE EXPENSES. THE LD. CIT( A) HAS UPHELD THE ORDER OF THE ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE I S IN APPEAL BEFORE US. 10. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E ISSUES RAISED IN THE PRESENT APPEAL ARE SIMILAR TO THE ISSUES RAISED IN ASSESSMENT YEAR 2006-07. HE FURTHER POINTED OUT THAT THE TRIBUNAL IN ITA NO.140 8/DEL/2011, RELATING TO ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 22.06.2020 HAS ALREADY ADJUDICATED 6 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 THE AFORESAID ISSUES AND HELD THAT THE ASSESSEE HAD COMMENCED ITS BUSINESS IN ASSESSMENT YEAR 2006-07 AND HAD ALSO DIRECTED THE A SSESSABILITY OF INTEREST INCOME AS BUSINESS INCOME AND ALLOWED SET OFF OF IN TEREST EXPENDITURE AGAINST THE SAME. FURTHER, THE BALANCE EXPENDITURE I.E. ADM INISTRATIVE AND OTHER EXPENSES WERE ALSO ALLOWED AS BUSINESS EXPENDITURE IN THE HANDS OF THE ASSESSEE. THE LD. AR FOR THE ASSESSEE FURTHER DREW OUR ATTENTION TO THE WRITTEN SUBMISSIONS AND POINTED OUT THAT DURING THE YEAR UN DER CONSIDERATION, PART OF THE INTEREST EXPENDITURE I.E. 40.78 CRORES WHICH RE LATES TO THE SONEPAT TOWNSHIP PROJECT, HAS ALREADY BEEN INCLUDED AS PART OF COST OF PROJECT. HE ALSO POINTED OUT THAT ONLY INTEREST EXPENDITURE OF RS.18 .64 CORES WAS CLAIMED AS BUSINESS DEDUCTION. 11. THE LD. DR FOR THE REVENUE DREW OUR ATTENTION T O PARA 4 AT PAGE 3 OF THE ORDER OF THE LD. CIT(A). HE FAIRLY POINTED OUT THAT OTHER ISSUES RAISED IN THE PRESENT APPEAL ARE COVERED BUT THERE WERE CERTAIN N EW FACTS IN RESPECT OF MAN SINGH ROAD PROPERTY. HE FURTHER POINTED OUT THAT DU RING THE YEAR UNDER CONSIDERATION, THE SAID PROPERTY WAS TRANSFERRED FO R RS.124.55 CRORES TO THE SISTER CONCERN, WHICH WAS EQUIVALENT TO THE AMOUNT PAID BY THE ASSESSEE AS ADVANCE FOR ACQUIRING THE SAID PROPERTY. HE STRESSE D THAT INTEREST EXPENDITURE OF RS.18.64 CRORES, WHICH WAS DIRECTLY RELATABLE TO THE SAID TRANSACTIONS OF MAN SINGH PROPERTY SHOULD ALSO HAVE BEEN RECOVERED FROM THE SISTER CONCERN; IN ANY CASE, THE CLAIM OF EXPENSE BECAUSE OF THE AFORESAID INTEREST EXPENDITURE OF RS.18.64 CRORES IS ILLOGICAL. HE STRESSED THAT THE AO MAY BE ALLOWED TO EXAMINE THE AFORESAID MATTER. 7 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 12. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT S INCE THE ASSESSEE WANTED FUNDS FOR THE PROJECT AT SONEPAT, HENCE, THERE WAS NECESSITY TO LIQUIDATE THE ADVANCE PAID AGAINST ACQUISITION OF THE MAN SINGH R OAD PROPERTY. HE FURTHER POINTED OUT THAT THE AFORESAID INTEREST EXPENDITURE IS DULY ALLOWABLE AS BUSINESS EXPENDITURE. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORDS. THE ASSESSEE WAS ENGAGED IN CARRYING ON REAL ESTATE ACT IVITIES, UNDER WHICH ALONG WITH OTHER PARTIES HAD MADE INVESTMENT IN THE LAND AT SONEPAT, WHICH WAS HELD AS STOCK IN TRADE BY THE ASSESSEE. THE AFORESAID AC TIVITIES WERE STARTED IN ASSESSMENT YEAR 2006-07 AND THE TRIBUNAL (SUPRA) HA D NOTED THAT STEPS WERE TAKEN BY THE ASSESSEE FOR THE COMMENCEMENT OF THE B USINESS AND, AFTER DELIBERATING UPON THE ISSUE IN PARAS 12 TO 14 AND R ELYING ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF WES TERN INDIA VEGETABLE PRODUCTS LTD. VS CIT 26 ITR 151 (BOM.); HONBLE GUJ ARAT HIGH COURT IN THE CASE OF CIT VS SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. 91 ITR 170 (GUJ.) AND HONBLE DELHI HIGH COURT IN THE CASES OF DHOOMK ETU BUILDERS & DEVELOPMENT (P.) LTD. VS ACIT 368 ITR 680 (DEL.) AND IN CIT VS ARCANE DEVELOPERS (P) LTD. 368 ITR 627 (DEL.), HAS HELD AS UNDER:- 19. APPLYING THE ABOVE SAID PROPOSITION TO THE FA CTS OF THE PRESENT CASE, WE HOLD THAT IN THE CASE OF THE ASSES SEE WHERE SUBSTANTIAL ACTIVITIES WERE CARRIED OUT BY THE ASSE SSEE, SINCE THE DATE OF INCORPORATION WHICH HAD CULMINATED IN R AISING LOANS, MAKING INVESTMENT IN PURCHASE OF LAND, WHICH WAS REFLECTED AS STOCK IN TRADE AND ALSO ADVANCING LOAN S TO ASSOCIATE CONCERNS FOR PURCHASING DIFFERENT PIECES OF LAND, IN ORDER TO FULFIL THE CONDITION OF LAND BANK OF 100 A CRES OR MORE, TO DEVELOP THE TOWNSHIP IN HARYANA AND WHERE THE 8 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 ASSESSEE IS ENTERED INTO DEVELOPMENT AGREEMENT AT T HE CLOSE OF THE PRESENT YEAR/BEGINNING OF THE NEXT YEAR, THE N ASSESSEE CAN BE SAID TO HAVE SET UP AND COMMENCED ITS BUSINE SS. FURTHER, THE ASSESSEE HAVING ALSO INVESTED SUBSTANT IAL AMOUNT IN THE PURCHASE OF ANOTHER PROPERTY IN THE Y EAR ITSELF, THUS, SET UP OF ITS BUSINESS AS PER ITS MEMORANDUM OF UNDERSTANDING WAS DONE, SINCE IT WAS ENGAGED IN THE BUSINESS OF REAL ESTATE. IT IS HELD THAT THERE IS N O MERIT IN THE ORDER OF THE AUTHORITIES BELOW IN THIS REGARD AND T HE SAME ARE REVERSED. ACCORDINGLY, WE HOLD THAT THE ASSESSEE HA VING NOT ONLY SET UP ITS BUSINESS BUT HAD ALSO COMMENCED ITS BUSINESS DURING THE PREVIOUS YEAR ITSELF. HENCE, GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 14. WITH REGARD TO THE BALANCE OF ISSUE OF ALLOWABI LITY OF INTEREST EXPENDITURE AND OTHER EXPENDITURE, IT WAS HELD AS UNDER:- 20. NOW COMING TO THE SECOND ISSUE RAISED BY THE A SSESSEE, IT IS CONSEQUENT TO THE FIRST ISSUE RAISED IN THE P RESENT APPEAL. ONCE THE BUSINESS HAD BEEN SET UP AND ALSO COMMENCE D IN INSTANT YEAR ITSELF, THEN THE INTEREST EXPENSES CLA IMED BY THE ASSESSEE AND ANY OTHER EXPENDITURE CLAIMED BY THE A SSESSEE IS TO BE ALLOWED AS BUSINESS EXPENDITURE. THE ASSES SEE HAD ALSO PARKED CERTAIN FUNDS TEMPORARILY IN THE BANK F DRS, ON WHICH IT HAD EARNED INTEREST WHICH IS TO INCLUDE AL SO AS BUSINESS INCOME IN THE HANDS OF THE ASSESSEE. ACCOR DINGLY, GROUND NO 2 AND 3 RAISED BY THE ASSESSEE ALSO STAND DECIDED IN THE FAVOUR OF THE ASSESSEE AND SAME IS DISMISSED . 15. VIDE PARA 22, THE TRIBUNAL ALSO HAS HELD THAT T HE INTEREST INCOME IS TO BE ASSESSED AS BUSINESS INCOME AND TO BE SET OFF OF AG AINST INTEREST EXPENDITURE AND PARA 22 READ AS UNDER:- 22. THE LAST ISSUE RAISED VIDE GROUND NO.5 IS TAXA BILITY OF INTEREST INCOME, WHICH WE HAVE ALREADY HELD AS BUSI NESS INCOME; EVEN OTHERWISE THE SAID INTEREST INCOME NEE DS TO BE SET UP OF AGAINST INTEREST EXPENDITURE AS FUNDS HAVE BE EN BORROWED BY THE ASSESSEE AND ONLY SURPLUS BORROWED FUNDS HAV E BEEN INVESTED IN BANK FDRS. ACCORDINGLY, THE GROUND NO. 5 RAISED BY THE ASSESSEE IS ALLOWED. 16. THE PRESENT ASSESSMENT WAS MADE IN THE HANDS OF THE ASSESSEE, FOLLOWING THE SAME REASONING AS IN ASSESSMENT YEAR 2006-07 BOTH BY THE 9 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 ASSESSING OFFICER AND THE CIT(A), SINCE THE ISSUES HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL IN EARLIER YEAR IN ASSESSEES OWN CASE , WE HOLD THAT AS THE BUSINESS OF THE ASSESSEE HAD ALREADY COMMENCED IN A SSESSMENT YEAR 2006-07, THEN THE INTEREST EXPENDITURE AND ALL OTHER EXPENSE S BOTH ADMINISTRATIVE AND OTHER EXPENSES ARE TO BE ALLOWED AS BUSINESS EXPEND ITURE. THE INTEREST INCOME IS TO BE TAXED AS BUSINESS INCOME AND THE INTEREST EXPENDITURE IS TO BE SET OFF AGAINST THE SAID BUSINESS INCOME. DURING THE YEAR U NDER CONSIDERATION, THE ASSESSEE HAD CAPITALIZED INTEREST EXPENDITURE OF RS .40.78 CORERS, HENCE, THERE IS NO ISSUE OF ITS ALLOWABILITY. 17. NOW, COMING TO THE SUBMISSIONS OF THE LD. DR FO R THE REVENUE, WE FIND THAT THE INTEREST EXPENDITURE OF RS.18.64 CRORES IS BUSINESS EXPENDITURE AND THE SAME NEEDS TO BE ALLOWED AS EXPENDITURE IN THE HANDS OF THE ASSESSEE, HENCE, WE HOLD SO. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THIS YEAR ARE THUS ALLOWED. 18. THE FACTS AND ISSUES RAISED IN APPEAL OF THE AS SESSEE RELATING TO ASSESSMENT YEAR 2008-09 ARE SIMILAR TO THE FACTS AN D ISSUES IN ASSESSMENT YEAR 2007-08 AND OUR DECISION IN ASSESSMENT YEAR 20 07-08 SHALL APPLY MUTATIS MUTANDIS . THE INTEREST EXPENDITURE IN THE RESPECTIVE YEAR W HICH HAS BEEN CAPITALIZED BY THE ASSESSEE AND NOT CLAIMED AS BUSINESS EXPENDITURE, HENCE, THE ONLY PORTION CLAIMED IN THE HANDS OF THE ASSESSEE IS TO BE ALLOWED AS BUSINESS EXPENDITURE. ACCORDINGLY, GROUNDS OF APP EAL RAISED BY THE ASSESSEE STANDS ALLOWED. 10 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 19. THE REVENUE IN ASSESSMENT YEAR 2009-10 HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) ERRED IN TREATING THE INTEREST INCOME OF RS. 9,95,52,864/- UNDER THE HEAD' INCOME FROM BUSINESS OF PROFESSION' ? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) ERRED IN ALLOWING TO SET OFF THE INTEREST EX PENDITURE OF RS. 7,07,12,753/- AND RS. 17,18,2411- BEING PROPORTIONA TE SALARY/WAGES EXPENDITURE AGAINST THE INTEREST INCOM E OF RS. 9,95,52,864/-? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE SETTING OFF THE NET IN TEREST INCOME OF RS. 2,59,96,602/- AGAINST THE INTEREST EXPENDITURE OF R S. 69,87,82,237/- WHICH THE ASSESSEE HAD ITSELF CAPITA LIZED AS WIP. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 87,810 /- BEING PRELIMINARY EXPENSES AND RS. 9,93,124/- BEING THE D EPRECIATION OVERLOOKING THE FACT THAT THE BUSINESS OF THE ASSES SEE HAD NOT STARTED DURING THE PREVIOUS YEAR RELEVANT OF ASSESS MENT YEAR. 5. THAT THE ORDER THE LD. CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. 6. THAT THE GROUND OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 20. THE CIT(A) WHILE DECIDING THE APPEAL FOR ASSESS MENT YEAR 2009-10 HAD ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THA T THE BUSINESS OF THE ASSESSEE HAD STARTED. WE FIND THAT THE ISSUE RAISE D BY THE REVENUE IN THE PRESENT APPEAL RELATING TO ASSESSMENT YEAR 2009-10 NEEDS TO BE DECIDED IN LINE WITH OUR DECISION IN ASSESSMENT YEARS 2007-08 & 200 8-09. FOLLOWING THE SAME PARITY OF REASONING, WE UPHOLD THE ORDER OF CI T(A) AND DISMISSED THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 11 ITA NO.5057/DEL/2010 & OTHERS ASSESSMENT YEARS 2007-08 TO 2009-10 21. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 TH DAY OF AUGUST, 2020. SD/- SD/- (N.K.BILLAIYA) (SUS HMA CHOWLA) )* / ACCOUNTANT MEMBER ! / VICE PRESIDENT / DATED : 18 TH AUGUST, 2020 SHEKHAR, SR. P. S. 720,489:94; COPY OF THE ORDER IS FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT 3. <4 = > / THE CIT(A) 4. ? <4 / THE PR. CIT 5. 6. 9@A0,4, ( ( / DR, ITAT, DELHI A-B; GUARD FILE. 7 / BY ORDER , 1940,4 // TRUE COPY // CDE*F , ( ASSISTANT REGISTRAR, ITAT, DELHI