ITO 3(1)(1), MUMBAI V. AIRMID DEVELOPER LTD, NEW DELHI

ITA 5662/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8013 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 20-09-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: JITENDRA SINGHVI
• Keywords: Rule of consistency
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.5662/M/2016 (AY 2011 - 2012) INCOME TAX OFFICER - 3(1)(1), MUMBAI. / VS. M/S. AIRMID DEVELOPERS LTD., M - 62 & 63, FIRST FLOOR, CANNAUT PLACE, NEW DELHI - 110001. ./ PAN : AAGCA5601G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. BEENA SANTOSH, DR / RESPONDENT BY : SHRI JITENDRA SINGHVI & AMIT KHATIWALA / DATE OF HEARING : 09.02.2017 / DATE OF PRONOUNCEMENT : 28 .02.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 20.09.2016 IS AGAINST THE ORDER OF THE CIT (A) - 8, MUMBAI DATED 30.06.2016 FOR THE ASSESSMENT YEAR 2011 - 12. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LD CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF RS. 52,73,015/ - ON LOANS WHICH WERE OBTAINED FOR THE ASSESSEES BUSINESS OF REAL ESTATE DEVELOPMENT AND HENCE OUGHT TO HAVE BEEN CAPITALIZED TO THE WORK - IN - PROGRESS OF THE PROJECT IN HAND I NSTEAD OF ALLOWING THE SAME AS REVENUE IN NATURE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN IGNORING THE RULING OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. DR. V.P. GOPINATHAN, 248 ITR 449 (SC) WHICH IS SQUARELY APPLICABLE TO FACS OF THE INSTANT CASE. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE AMOUNT OF DISALLOWANCE U/S 14A OF THE ACT HAS TO BE COMPUTED AS PER RULE 8D OF IT RULES, 1962 WHEN THE COMPUTATION OF THE ASSESSEE WAS NOT FOUND TO BE CORRECT AND AS HELD IN THE ORDER OF THE HONBLE HIGH COURT IN THE CASE OF M/S. GODREJ & BOYCE MANUFACTURING CO. LTD. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASING, SELLING, DEVELOPING, CONSTRUCTING, HIRING AND DEALING IN REAL ESTATE, PROPERTIES AND CONSTRUCTION. ASSESSEE FILED THE RETURN OF INCOME 2 DECLARING THE TOTAL LOSS OF RS. 8,25,937/ - . ASSESSMENT WA S COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 47,33,730/ - . IN THE ASSESSMENT, AO MADE CERTAIN DISALLOWANCES VIZ (I) DISALLOWANCE OF RS. 52,73,015/ - ON ACCOUNT OF INTEREST ON LOANS AND (II) DISALLOWANCE OF RS. 2,86,648/ - U /S 14A R.W. RULE 8D(2)(III) OF THE ACT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) GRANT ED RELIEF TO THE ASSESSEE VIDE PARAS 5.1.3 (RELATING TO DISALLOWANCE OF INTEREST) AND 5.2.5 ( RELATING TO DISALLOWANCE U/S 14A R.W. RULE 8D(2)(III)). AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE A BOVE MENTIONED GROUNDS. 4. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 5. ON THE OTHER HAND, LD AR FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 6. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE THE TRIBUNAL, I FIND, THERE ARE COUPLE OF ISSUES INVOLVED IN THIS APPEAL IE (I) DISALLOWANCE OF INTEREST ON LOAN AND (II) DISALLOWANCE U/S 14A READ WITH RULE 8D(2)(III) OF THE IT RULES, 1962. IN THIS REGARD, THE SAID PARAS 5.1.3 AND 5.2.5 OF THE CIT (A)S ORDER ARE RELEVANT. CONSIDERING THE SIGNIFICANCE AND FOR THE SAKE OF COMPLETENESS OF THIS ORDE R, THE SAID PARAS ARE EXTRACTED AS UNDER: - 5.1.3. THE LD DRP HAS FOLLOWED ITS OWN DIRECTIONS ON THIS ISSUE IN AY 2010 - 11. THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE BEING SIMILAR TO THOSE EXAMINED BY DRP FOR AY 2009 - 10 & 2010 - 11, I FIND NO REASON T O DIFFER FROM THE VIEW TAKEN BY THE LD DRP IN APPELLANTS CASE IN EARLIER YEARS. ACCORDINGLY, ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION OF THIS EXPENDITURE OF RS. 52,73,015/ - U/S 57(III) AND ALLOW SET OFF AND CARRY FORWARD OF THE RESULTANT LOSS AS PER LAW. THIS GROUNDS OF APPEAL IS ALLOWED. 5.2.5. I FIND THAT THE ASSESSING OFFICER HAS NOT GIVEN DUE WEIGHTAGE TO CATEGORICAL DECISIONS OF JURISDICTIONAL COURTS ON THIS ISSUE, NOR HAS BROUGHT ANYTHING ON RECORD TO DIFFERENTIATE FACTS OF THIS CASE FROM SIMILAR FACTS CONSIDERED BY HONBLE ITAT, MUMBAI IN ABOVE DECISIONS. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO OF HIGHER JUDICIAL AUTHORITIES CITED ABOVE, THE DISALLOWANCE OF RS. 2,86,648/ - U/S 14A R.W. RULE 8D(2)(III) MADE BY THE AO IS DELETED. THIS G ROUNDS OF APPEAL IS ALLOWED. 3 7. CONSIDERING THE ABOVE, I AM OF THE OPINION, CIT (A) WHILE GRANTING RELIEF TO THE ASSESSEE DISCUSSED THE ISSUES AT LENGTH AND FOLLOWED THE PRINCIPLE OF CONSISTENCY AS WELL AS THE DECISIONS OF THE ITAT ON IDENTICAL ISSUES. THEREFORE, IN MY OPINION, THE DECISION TAKEN BY THE CIT (A) ON BOTH THE ISSUES RAISED BY THE REVENUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, BOTH THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APP EAL OF THE REVENUE IS DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 2 8 T H FEBRUARY, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 28.02.2017 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI