ITO 9(1)(4), MUMBAI V. ASIAN HOMES P.LTD, MUMBAI

ITA 5589/MUM/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6164 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KRUNAL G AGLANI
• Keywords: Business income; Rule of consistency; Source of fund; Tax effect; Set aside; Liquidation
• Section: 143(3); 37(1); 263

Judgement Text

1 ITA 5589/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) I.T.A.5589/MUM/2016 (ASSESSMENT YEAR 2012-13) INCOME-TAX OFFICER-9(1)(4), MUMBAI VS M/S ASIAN HO MES PVT LTD A-501, KOTIA NIRMAN, OPP. LAXMI INDUSTRIAL ESTATE, NEW ANDHERI LINK ROAD, ANDHERI (W), MUMBAI-400 053 PAN : AAGCA6734J APPELLANT RESPONDENT APPELLANT BY SHRI BHARAT ANDHLE, DR RESPONDENT BY SHRI KRUNAL GAGLANI, AR DATE OF HEARING 06-09-2021 DATE OF PRONOUNCEMENT 14-09-2021 O R D E R PER SAKTIJIT DEY (JM) CAPTIONED APPEAL BY THE REVENUE ARISES OUT OF ORDE R DATED 29-06-2016 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-16, MU MBAI FOR THE ASSESSMENT YEAR 2012-13. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE READ AS UNDER:- I) 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN FOLLOWING THE PRECEDENT OF THE ASSE SSEE'S APPEAL FOR AY 2011- 12 NOT APPRECIATING THAT IN THAT YEAR, THE INTEREST INCOME OF RS. 1,59,47,8597- WAS HELD TO' BE HAVING A DIRECT NEXUS WITH INTEREST EXPENDITURE OF RS. 1,44,15,962/- RESULTING IN NET INCOME OF RS.15,31,8 97/- AND THE ASSESSABILITY OF SUCH INCOME UNDER THE HEAD 'PROFITS AND GAINS FR OM BUSINESS OR PROFESSION' INSTEAD OF 'INCOME FROM OTHER SOURCES' AND CONSEQUE NTLY THE ELIGIBILITY OF THE 2 ITA 5589/MUM/2016 SET OFF OF BROUGHT FORWARD BUSINESS LOSSES AGAINST IT HAD A TAX EFFECT BELOW THE CEILING FOR THE FILING OF APPEAL TO THE LTAT?' II) 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO GIVE ANY COGENT REASON WHY THE INT EREST ON IDLE FUNDS BORROWED FOR THE BUSINESS WHICH HAD NOT COMMENCED N OR WAS CARRIED ON DURING THE YEAR, IS ASSESSABLE AS BUSINESS INCOME E LIGIBLE TO BE SET OFF AGAINST BROUGHT FORWARD BUSINESS LOSSES?' 2. BRIEFLY THE FACTS ARE, THE ASSESSEE, A RESIDENT COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. IN COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, WHILE VERIFYING THE PROFIT AND L OSS ACCOUNT OF THE ASSESSEE NOTICED THAT THE ASSESSEE HAS CREDITED INTEREST INC OME RECEIVED ON LOAN ADVANCED AMOUNTING TO RS.1,71,90,376/- AND HAS ALSO BOOKED C ORRESPONDING EXPENDITURE. BEING OF THE VIEW THAT THE INTEREST INCOME RECEIVED ON LOAN ADVANCED CANNOT BE TREATED AS INCOME FROM BUSINESS SINCE THE ASSESSE E IS NOT IN MONEY LENDING BUSINESS, THE ASSESSING OFFICER SHOW CAUSED THE ASS ESSEE TO EXPLAIN AS TO WHY SUCH INCOME SHOULD NOT BE ASSESSED UNDER THE HEAD INCOM E FROM OTHER SOURCES. THOUGH, THE ASSESSEE FURNISHED ITS REPLY JUSTIFYING ITS CLAIM THAT THE INTEREST INCOME HAS TO BE ASSESSED AS INCOME FROM BUSINESS ; HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED. ULTIMATELY, WHILE COMPLE TING THE ASSESSMENT, THE ASSESSING OFFICER TREATED THE INTEREST INCOME EARNE D ON LOAN ADVANCED AS INCOME FROM BUSINESS AND DISALLOWED CORRESPONDING EXPENSE S OF RS.2,95,415/- ON THE REASONING THAT SUCH EXPENDITURE WAS NOT INCURRED WH OLLY AND EXCLUSIVELY FOR EARNING THE INTEREST INCOME. ASSESSEE CONTESTED THE DECISION OF THE ASSESSING OFFICER BEFORE LEARNED COMMISSIONER (APPEALS). FOLL OWING HIS ORDER PASSED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12, LE ARNED COMMISSIONER (APPEALS) HELD THAT THE INTEREST INCOME EARNED ON L OANS ADVANCED HAS TO BE 3 ITA 5589/MUM/2016 TREATED AS INCOME FROM BUSINESS. AS REGARDS THE DISALLOWANCE OF EXPENDITURE, LEARNED COMMISSIONER (APPEALS) ALSO DELETED SUCH DI SALLOWANCE. 3. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED, IDENTICAL DISPUTE ARISING IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2 012-13 WAS DECIDED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT INTEREST INCOME IS TO BE ASSESSED AS INCOME FROM BUSINESS. FURTHER, HE SUBMITTED, SIMILAR ISSUE ARI SING IN CASE OF ASSESSEES SISTER CONCERNS, VIZ. M/S ASIAN INFRA PROJECTS PVT LTD HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. FINALLY, HE SUBMITTED, IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2013- 14, THE ASSESSING OFFICER HAD ACCEPTED THE INTEREST INCOME AS INCOME FROM BUSINESS AND ALLOWED CORRESPONDING EXPENDITURE. TH OUGH, THE ASSESSMENT ORDER WAS REVISED UNDER SECTION 263 OF THE ACT; HOWEVER, THE TRIBUNAL, WHILE DECIDING ASSESSEES APPEAL, QUASHED THE REVISION ORDER. THUS , HE SUBMITTED, THE ORDER PASSED BY LEARNED COMMISSIONER (APPEALS) SHOULD BE UPHELD. 4. THOUGH, LEARNED DEPARTMENTAL REPRESENTATIVE AGRE ED THAT THE ISSUE IS COVERED BY THE DECISIONS OF THE TRIBUNAL; HOWEVER, HE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS OBSERVED, IDENTICAL DISPUTE AROSE IN CASE OF ASSESS EES SISTER CONCERN, M/S ASIAN INFRA PROJECTS PVT LTD IN ASSESSMENT YEARS 2009-10 A ND 2011-12. THOUGH, LEARNED COMMISSIONER (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE; HOWEVER, THE REVENUE CARRIED THE MATTER IN FURTHER APPEAL BEFORE THE TRIBUNAL. WHILE DECIDING THE APPEALS IN ITA NOS 5584 & 5583/MUM/2016 IN ORDE R DATED 03-01-2020, THE CO-ORDINATE BENCH HELD AS UNDER:- 3. THE GROUNDS RAISED BY THE REVENUE READ AS UND ER: - I) WHETHER IN THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THERE WAS A NEXUS BETW EEN INTEREST BEARING 4 ITA 5589/MUM/2016 BORROWINGS AND INTEREST YIELDING ADVANCES IGNORING THAT, AT BEST, THERE WAS ONLY PARTIAL NEXUS AND NOT COMPLETE NEXUS AS EVIDEN CED BY THE FACT THAT INTEREST EARNED WAS RS.1,44,41,920/- WHEREAS INTERE ST PAID ON BORROWINGS MADE FOR MAKING THE INTEREST YIELDING ADVANCES WAS RS.2,38,56,459/-? II) WHETHER IN THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT NOTWITHSTANDING A PARTIAL NEXUS BETWEEN INTEREST PAID ON BORROWINGS UTILIZED FOR INTEREST Y IELDING ADVANCES, THE ENTIRE INTEREST ATTRIBUTABLE TO BORROWINGS NOT UTILIZED FO R MAKING INTEREST YIELDING ADVANCES COULD NOT HAVE BEEN ALLOWED AS BUSINESS LO SS IN VIEW OF THE FACT THAT NEITHER THE BUSINESS HAD COMMENCED NOR WAS IT CARR IED ON DURING THE YEAR?' THE APPELLANT PRAYS THAT THE ORDER OF TH E CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE DCIT 9(1)(2) BE RESTORED .' 4. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS INCLUDING WRITTEN SUBMISSIONS AND DOCUMENTS PLACED ON RECORD. WE HAVE ALSO DELIBERATE D ON JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US INCLUDING DECISION RENDERED BY TRIB UNAL IN ASSESSEE'S OWN CASE FOR AY 2012-13 IN AN APPEAL FILED BY THE REVENUE VIDE ITA NO.5582/MUM/2016 ORDER DATED 06/02/2017 . 5.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESI DENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN THE BUSINESS OF RE AL ESTATE, WAS ASSESSED FOR YEAR UNDER CONSIDERATION ON 14/03/2014, WHEREIN THE INCO ME OF THE ASSESSEE WAS DETERMINED AT RS.146.65 LACS AFTER CERTAIN ADDITION S / ADJUSTMENTS AS AGAINST RETURNED LOSS OF RS.95.60 LACS E-FILED BY THE ASSES SEE ON 27/09/2011. 5.2 DURING ASSESSMENT PROCEEDINGS, THE PERUSAL OF P ROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION AS WELL AS FOR THE PRECEDING YE AR REVEALED THAT THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS ACTIVITY OF REAL ESTATE. HOWEVER, THE ASSESSEE REFLECTED INTEREST INCOME OF RS.144.41 LACS WHICH MAINLY CONS ISTED-OFF OF INTEREST ON LOANS FOR RS.136.57 LACS AND INTEREST ON INCOME TAX REFUND FO R RS.7.77 LACS. THE SAID INCOME WAS OFFERED AS BUSINESS INCOME DESPITE THE FACT THA T THE BUSINESS ACTIVITY OF THE ASSESSEE WAS THAT OF REAL ESTATE AND NOT MONEY LEND ING. AGAINST INTEREST INCOME, THE ASSESSEE CLAIMED ADMINISTRATIVE AND OTHER EXPENSES OF RS.1.64 LACS AS WELL AS INTEREST EXPENDITURE OF RS.238.56 LACS. 5.3 AS PER THE OBSERVATIONS OF LD. AO, THE LOANS OB TAINED BY THE ASSESSEE APPEARED TO HAVE BEEN DIVERTED TO DIRECTORS / SISTER CONCERN S. THE ASSESSEE PAID INTEREST OF 12% TO COUPLE OF LENDERS AND INTEREST OF 16% TO ONE LENDER WHEREAS IT WAS RECEIVING INTEREST OF 12% ON ITS OWN LENDING WHICH WAS EVIDEN T FROM THE FACT THAT INTEREST INCOME WAS RS.136.57 LACS ITA NOS.5583-84/MUM/2016 ASIAN INFRAPROJECTS PRIVATE LIMITED ASSESSMENT YEARS-2009-10 & 2011-12 AGAINST INCOME EXPENDITURE OF RS.238.58 LACS. IT WAS NOTED THAT THE ASSESSEE WAS NOT A FINANCING COMPANY AND IT HAD NO LICENSE OF MONEY LENDING AND THEREFORE, THE INTEREST INCOME WAS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME OFFERED BY THE 5 ITA 5589/MUM/2016 ASSESSEE. THE FAILURE OF THE ASSESSEE TO DEFEND THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS LED LD. AO TO TREAT THE INTE REST INCOME AS INCOME FROM OTHER SOURCES. CONSEQUENTLY, INTEREST EXPENDITURE WAS NOT ALLOWED AS DEDUCTION SINCE THE ASSESSEE FAILED TO SUBSTANTIATE THE NEXUS OF INTERE ST EXPENDITURE WITH THE INTEREST INCOME EARNED BY THE ASSESSEE. 5.4 THE INTEREST EXP ENDITURE WAS ALSO NOT ALLOWED BY INVOKING EXPLANATION TO SECTION 37(1) SINCE THE ASS ESSEE, IN THE OPINION OF LD.AO, COULD NOT CARRY OUT THE BUSINESS OF MONEY LENDING A ND SUCH ACTIVITY WAS IN VIOLATION OF PROVISIONS OF THE BOMBAY MONEY LENDERS ACT. IN T HE ALTERNATIVE, LD. AO HELD THAT THE EXCESS INTEREST OF 4% AMOUNTING TO RS.40.96 LAC S BEING PAID TO ONE OF THE LENDER ENTITIES WAS TO BE DISALLOWED U/S 36(1)(III) / 57 O F THE ACT. 5.5 FINALLY, THE INTEREST INCOME WAS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND TOTAL INCOME WAS DETERMINED AT RS.146.6 5 LACS. THE INTEREST EXPENDITURE OF RS.238.56 LACS WAS NOT ALLOWED AS DE DUCTION EITHER U/S 36(1)(III) OR U/S 57 OF THE ACT. 6.1 BEFORE LEARNED CIT(A), THE ASSESSEE, INTER-ALIA , SUBMITTED THAT THE ASSESSEE HAD BORROWED FUNDS FOR THE PURPOSE OF ITS BUSINESS. HOW EVER, DUE TO SLOWDOWN IN THE MARKET, THE PROJECTS COULD NOT BE COMMENCED WHEREAS THE ASSESSEE'S LIABILITY TO PAY INTEREST ON BORROWED FUNDS HAD ITA NOS.5583-84/MUM/ 2016 ASIAN INFRAPROJECTS PRIVATE LIMITED ASSESSMENT YEARS-2009-10 & 2011-12 STARTED. THEREFORE, THE LOANS WERE ADVANCED BY THE ASSESSEE SO AS TO REDUCE THE O VERALL INTEREST COST. IT WAS ALSO SUBMITTED THAT UNDER NORMAL CIRCUMSTANCES WHEN THE ASSESSEE DID NOT EARN ANY INCOME DURING THE YEAR, STILL THE EXPENSES WOULD BE ALLOWABLE WHICH WOULD ULTIMATELY RESULT INTO LOSSES TO THE ASSESSEE. TO A VOID HUGE FINANCIAL LOSSES AND TO REDUCE OVERALL FINANCIAL BURDEN TOWARDS INTEREST LI ABILITY, THE ASSESSEE ADVANCED MONEY OUT OF THE BORROWED FUNDS TO ITS ASSOCIATED E NTITIES. IF SUCH LOANS WERE NOT GIVEN, THE RESULTANT ACCUMULATED LOSSES WOULD EVEN LEAD TO BANKRUPTCY OR LIQUIDATION OF THE ASSESSEE. IN THE AFORESAID BACKGROUND, THE A SSESSEE PLEADED THAT THE INTEREST WAS ASSESSABLE UNDER THE HEAD BUSINESS INCOME AND I NTEREST EXPENDITURE WOULD BE AN ALLOWABLE DEDUCTION. 6.2 REGARDING NEXUS BETWEEN BORROWED FUNDS VIS--VIS LENDING MADE BY THE ASSESSEE, THE ATTENTION WAS DRA WN TO THE FACT THAT REQUISITE DETAILS WERE FILED BY THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 05/03/2014 WHICH WERE NOT CONSIDERED B Y LD. AO WHILE FRAMING THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT THE FUNDS W ERE BORROWED FOR BUSINESS PURPOSES AND THE LENDING WERE MADE TO REDUCE OVERAL L INTEREST COST AS THE PROJECT COULD NOT BE STARTED. THEREFORE, THE INTEREST EXPEN DITURE HAVING DIRECT NEXUS WITH INTEREST INCOME WAS AN ALLOWABLE DEDUCTION. 6.3 WIT HOUT PREJUDICE, IT WAS SUBMITTED THAT EVEN IF INTEREST INCOME WAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES, THE CORRESPONDING INTEREST EXPENSES HAVING DIRECT NEXUS WITH SUCH INCOME OUGHT TO HAVE BEEN ALLOWED TO BE REDUCED / SET-OFF THEREFROM SINC E THE PRIME INTENT OF THE ASSESSEE WAS TO REDUCE THE INTEREST COST SO AS TO AVOID DEFA ULT IN TIMELY ITA NOS.5583- 84/MUM/2016 ASIAN INFRAPROJECTS PRIVATE LIMITED ASS ESSMENT YEARS-2009-10 & 2011-12 SERVICING OF LOANS BY WAY OF REPAYMENT OF P RINCIPAL AND INTEREST ON FUNDS BORROWED. THE ATTENTION WAS DRAWN TO THE FINANCIAL STATEMENTS TO SUPPORT THE FACT 6 ITA 5589/MUM/2016 THAT THERE WAS DIRECT NEXUS BETWEEN BORROWINGS AND LENDING. 6.4 FINALLY, THE ASSESSEE ALSO ASSAILED THE PROPORTIONATE DISALLOWAN CE OF RS.40.96 LACS AS PROPOSED BY LD.AO, IN THE ALTERNATIVE, BY SUBMITTING THAT IN TEREST EXPENSES WERE INCURRED FOR THE EXISTENCE OF BUSINESS. 7.1 AFTER DUE CONSIDERAT ION OF FACTUAL MATRIX, IT WAS OBSERVED BY LEARNED FIRST APPELLATE AUTHORITY THAT THE ASSESSEE HAD ALREADY STARTED REAL ESTATE BUSINESS AND GIVEN AND RECEIVED ADVANCE S FOR THIS PURPOSE IN EARLIER YEARS ALSO. IN FACT, THE ASSESSEE EARNED PROFIT FROM REAL ESTATE BUSINESS IN AY 2008-09. TO SUPPORT THE SAME, THE DETAILS OF INCOME EARNED BY T HE ASSESSEE DURING AYS 2008-09 TO 2010-11 HAS ALREADY BEEN TABULATED IN PARA 5.1.1 OF THE IMPUGNED ORDER. 7.2 UPON PERUSAL OF VARIOUS CLAUSES OF MEMORANDUM O F ASSOCIATION (MOA), IT WAS SEEN THAT ALTHOUGH THE PRIMARY BUSINESS OF THE ASSE SSEE WAS TO ACQUIRE / DEVELOP PROPERTIES BUT THE ASSESSEE COULD INVEST AND DEAL W ITH THE MONEY OF THE COMPANY NOT IMMEDIATELY REQUIRED. THE ASSESSEE COULD RECEIVE DE POSITS AS WELL AS ADVANCE MONEY AND THEREFORE, IT COULD NOT BE SAID THAT THE SAID A CTIVITY VIOLATED THE OBJECTIVES OF THE ASSESSEE. RELIANCE WAS PLACED, INTER-ALIA, ON THE D ECISION OF HON'BLE BOMBAY HIGH COURT RENDERED IN CIT V/S LOK HOLDINGS (308 ITR 356 ) WHEREIN IT WAS HELD THAT INTEREST RECEIVED BY THE ASSESSEE PROPERTY DEVELOPE R, ON TEMPORARY DEPOSITS OF SURPLUS MONEY OUT OF ADVANCES RECEIVED BY FROM INTE NDING PURCHASES WAS BUSINESS INCOME AND NOT INCOME FROM OTHER SOURCES. IN THE IT A NOS.5583-84/MUM/2016 ASIAN INFRAPROJECTS PRIVATE LIMITED ASSESSMENT YEAR S-2009-10 & 2011-12 ABOVE BACKGROUND, IT WAS ALSO NOTED THAT INTEREST INCOME AS WELL AS INTEREST EXPENDITURE WAS ACCEPTED BY THE DEPARTMENT IN EARLIER YEARS TO BE THE BUSINESS INCOME OF THE ASSESSEE. THEREFORE, LD. AO WAS DIRECTED TO TREAT T HE INTEREST INCOME AS BUSINESS INCOME AND ALLOW INTEREST EXPENDITURE AGAINST THE S AME. ALTERNATIVELY, IF THE INTEREST INCOME WAS TO BE TREATED AS INCOME FROM OTHER SOURC ES, THEN INTEREST EXPENDITURE WOULD STILL BE ALLOWABLE U/S 57 OF THE ACT. AT THE SAME TIME, LD. CIT(A) CONFIRMED THE STAND OF LD. AO IN MAKING PROPORTIONATE DISALLOWANC E OF RS.40.96 LACS, BEING INTEREST PAID AT EXCESS RATES SINCE THE BORROWED CA PITAL WAS DIVERTED AT LOWER RATES OF INTEREST. 7.3 THE PERUSAL OF ORDER GIVING EFFECT DATED 27/11/ 2015 PASSED BY LD. AO WOULD REVEAL THAT ULTIMATELY, THE INCOME OF THE ASSESSEE WAS DETERMINED AT A LOSS OF RS.53.85 LACS, INTER-ALIA, AFTER DISALLOWANCE OF IN TEREST EXPENDITURE OF RS.40.96 LACS. THE INTEREST INCOME WAS ASSESSED UNDER THE HEAD BUS INESS INCOME. AGGRIEVED BY AFORESAID ADJUDICATION, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US. 8. UPON DUE CONSIDERATION OF FACTUAL MATRIX AS ENUM ERATED IN PRECEDING PARAGRAPHS, WE FIND THAT LD. CIT(A) HAS CLINCHED THE ISSUE IN T HE RIGHT PERSPECTIVE. IT IS QUITE EVIDENT THAT THE BUSINESS OF THE ASSESSEE WAS ALREA DY SET-UP SINCE THE ASSESSEE HAD ALREADY REFLECTED INCOME FROM REAL ESTATE BUSINESS DURING AY 2008-09. THE PERUSAL OF ASSESSEE'S FINANCIAL STATEMENTS FOR YEAR UNDER CONS IDERATION WOULD SHOW THAT THE ASSESSEE HAS OBTAINED UNSECURED LOANS OF RS.583.56 LACS WHICH HAS SUBSTANTIALLY BEEN ITA NOS.5583-84/MUM/2016 ASIAN INFRAPROJECTS P RIVATE LIMITED ASSESSMENT 7 ITA 5589/MUM/2016 YEARS-2009-10 & 2011-12 ADVANCED TO DIRECTORS & OTH ERS (TO THE EXTENT OF RS.185.45 LACS) AND TO MAKE-UP FOR THE ACCUMULATED LOSSES OF RS.317.31 LACS INCURRED BY THE ASSESSEE OVER THE YEARS. THE ASSESSEE DO NOT HAVE A NY OTHER SOURCE OF FUND EXCEPT SHARE CAPITAL OF RS.1 LAC. THEREFORE, THERE WAS COM PLETE NEXUS BETWEEN THE BORROWINGS AND LENDING MADE BY THE ASSESSEE. THIS B EING THE CASE, THE INTEREST EXPENDITURE HAVING DIRECT NEXUS WITH INTEREST INCOM E WAS CLEARLY ALLOWABLE TO THE ASSESSEE. 9. SO FAR AS THE QUESTION OF APPLICABILITY OF HEAD OF INCOME IS CONCERNED, RULE OF CONSISTENCY FAVOR'S ASSESSEE'S STAND WHICH IS EVIDE NT FROM THE FACT THAT THE ASSESSEE WAS FOLLOWING CONSISTENT METHOD OF OFFERING SUCH IN COME AS BUSINESS INCOME. THE LD. AR HAS PLACED ON RECORD STATUS OF ASSESSMENT FOR AY S 2008-09 TO 2015-16, THE PERUSAL OF WHICH WOULD REVEAL THAT SIMILAR INTEREST INCOME HAS BEEN ACCEPTED BY REVENUE AS BUSINESS INCOME IN SCRUTINY ASSESSMENT P ROCEEDINGS U/S 143(3) FOR AYS 2013-14 TO 2014-15. IN AYS 2008-09, 2010-11 & 2015- 16, THERE WAS NO SCRUTINY ASSESSMENT AND ASSESSEE'S CLAIM WAS ACCEPTED IN SEL F-ASSESSMENT. FURTHER, RELYING UPON AY 2011-12, SIMILAR VIEW WAS TAKEN BY LD. CIT( A) IN AY 2012-13, AGAINST WHICH REVENUE PREFERRED FURTHER APPEAL BEFORE THIS TRIBUN AL VIDE ITA NO. 5582/MUM/2016 ORDER DATED 06/02/2017 WHEREIN THE APPEAL OF THE RE VENUE WAS DISMISSED. 10. FINALLY, THE UNDISPUTED FINDINGS ARE THAT THE A SSESSEE, IN TERMS OF ITS MEMORANDUM OF ASSOCIATION, COULD RECEIVE DEPOSITS A S WELL AS ADVANCE MONEY AND THEREFORE, IT COULD NOT BE SAID THAT THE SAID ACTIV ITY VIOLATED THE OBJECTIVES OF THE ASSESSEE. THE RATIO OF DECISION OF HON'BLE BOMBAY H IGH ITA NOS.5583-84/MUM/2016 ASIAN INFRAPROJECTS PRIVATE LIMITED ASSESSMENT YEAR S-2009-10 & 2011-12 COURT RENDERED IN CIT V/S LOK HOLDINGS (308 ITR 356) WAS CLEARLY APPLICABLE WHEREIN IT WAS HELD THAT INTEREST RECEIVED BY THE ASSESSEE PROPERT Y DEVELOPER, ON TEMPORARY DEPOSITS OF SURPLUS MONEY OUT OF ADVANCES RECEIVED BY FROM INTENDING PURCHASES WAS BUSINESS INCOME AND NOT INCOME FROM OTHER SOURCES. THEREFORE, NO FAULT COULD BE FOUND IN THE IMPUGNED ORDER, IN THIS REGARD. 11. KEEPING IN VIEW THE ENTIRETY OF FACTS AND CIRCU MSTANCES, WE FIND THAT LD. CIT(A) WAS CORRECT IN DIRECTING LD.AO TO ASSESS THE INTERE ST INCOME AS BUSINESS INCOME AND ALLOW INTEREST EXPENDITURE AGAINST THE SAME TO THE EXTENT AS SPECIFIED IN THE IMPUGNED ORDER. THE GROUND STAND DISMISSED TO THAT EXTENT. 6. IT WOULD BE RELEVANT TO OBSERVE, IN ASSESSEES O WN CASE IN ASSESSMENT YEAR 2013-14, WHILE COMPLETING THE ASSESSMENT UNDER SECT ION 143(3) OF THE ACT, THE ASSESSING OFFICER TREATED THE INTEREST INCOME RECEI VED ON LOANS ADVANCED AS INCOME FROM BUSINESS AND ALSO ALLOWED THE CORRESP ONDING EXPENDITURE. HOWEVER, THE REVISIONARY AUTHORITY IN EXERCISE OF P OWERS CONFERRED UNDER SECTION 8 ITA 5589/MUM/2016 263 OF THE ACT REVISED THE ASSESSMENT ORDER AND DIR ECTED THE ASSESSING OFFICER TO TREAT THE INTEREST INCOME AS INCOME FROM OTHER SOU RCES. WHILE DECIDING ASSESSEES APPEAL AGAINST REVISIONARY ORDER PASSED UNDER SECTION 263 OF THE ACT, THE TRIBUNAL IN ITA NO.2593/MUM/2018 DATED 03-01-20 20 NOT ONLY QUASHED THE ORDER PASSED UNDER SECTION 263 OF THE ACT, BUT ALSO RESTORED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER TREATING THE INTEREST INCOME EARNED ON LOANS ADVANCED AS BUSINESS INCOME AND ALSO ALLOWING CORRE SPONDING EXPENDITURE. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LEARNED COMMISSIONER (APPEALS) DISMISS THE GROUNDS RAISED. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2021 SD/- SD/- (RAJESH KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 14/09/2021 PAVANAN COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI 9 ITA 5589/MUM/2016