M/S. AWAS DEVELOPERS & CONSTRUCTIONS P. LTD., MUMBAI V. DY CIT CC-5(4), MUMBAI

ITA 551/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5384 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 11-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 143(3); 139(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri B.R. Baskaran (AM) I.T.A. No. 551/Mum/2021 (A.Y. 2016-17) M/s. Awas Developers & Constructions Pvt. Ltd. Room No. 6, 3 rd Floor Capri, Anant Kanekar Marg, Bandra East Mumbai-400 051. PAN : AADCA0702D Vs. DCIT-5(4) Room No. 1927 19 th Floor Air India Building Nariman Point Mumbai-400 021. (Appellant) (Respondent) Assessee by None Department by Ms. Naina Krishnakumar Date of Hearing 19.07.2022 Date of Pronouncement 20.07.2022 O R D E R The assessee has filed this appeal challenging the order dated 2.8.2019 passed by learned CIT(A)-53, Mumbai and it relates to A.Y. 2016-17. 2. The learned counsel of the assessee has moved a petition seeking adjournment stating that promoter directors of the assessee company are still under judicial custody. However, on perusal of the appeal folder, I noticed that the issue contested by the assessee relates to addition of interest expenditure of Rs. 10,72,33,726/- under section 43B of the I.T. Act. Hence, I proceed to dispose of the appeal ex parte, without presence of the assessee. 3. The assessee company is engaged in the business of development of real estate. The assessment order under consideration was completed by the Assessing Officer under section 143(3) of the Act. The assessee had filed return of income declaring loss of Rs. 4.71 crores. The Assessing Officer noticed that the assessee has claimed interest expenditure of Rs.10,72,33,726/- payable to M/s Punjab and Maharashtra Co-operative Bank. However, the same has not M/s. Awas Developers & Constructions Pvt. Ltd. 2 been paid on or before the due date of filing of return of income prescribed u/s 139(1) of the Act. Accordingly, he took the view that the same is liable to be disallowed under section 43B of the Act. He noticed that the assessee has capitalised interest expenditure to “working in progress”. Hence the AO reduced the above said amount from the amount of work in progress also. The Learned CIT(A) also confirmed the same. 4. I have heard learned DR and perused the record. I noticed that the provisions of section 43B, as per which certain deductions are to be allowed only on actual payments, is made applicable to the interest payable to a Cooperative bank by the Finance Act, 2017 w.e.f. 1.4.2018. The word "co- operative bank" other than primary agricultural credit society or primary co- operative agricultural and rural development bank" was inserted in Clause (d) of sub-section 43B w.e.f. 1.4.2018, meaning thereby, interest payable to a cooperative bank which is not paid on or before the due date prescribed for filing of return of income under section 139(1) of the Act shall be liable to be disallowed under section 43B of the Act only w.e.f. A.Y. 2018-19. I notice that the year under consideration is A.Y. 2016-17. For this year, interest payable to a co-operative bank has not been included in the provisions of section 43B of the Act. Accordingly, disallowance made by the Assessing Officer and confirmed by learned CIT(A) is not in accordance with law. Accordingly, I set aside the order passed by learned CIT(A) on this issue and direct the Assessing Officer to delete the disallowance of interest payable to M/s Punjab and Maharashtra Co-operative Bank made under section 43B of the Act. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 20.07.2022. Sd/- (B.R. BASKARAN) ACCOUNTANT MEMBER Mumbai; Dated : 20/07/2022 M/s. Awas Developers & Constructions Pvt. Ltd. 3 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// (Assistant Registrar) PS ITAT, Mumbai