GIGAPLEX ESTATE PVT. LTD. (FORMERLY KNOWN AS B. RAHEJA BUILDERS PVT. LTD.), MUMBAI V. DCIT CENT. CIR. 4(2), MUMBAI

ITA 6170/MUM/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0912 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 19-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY P SOMMA N I
• Keywords: Business income; Business expenditure; Cost of acquisition; Capital receipt; Sham transactions
• Section: 143(3); 148; 263

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 6170 / MUM/ 2016 ( / ASSESSMENT YEAR : 2012 - 13 ) M/S. GIGAPLEX ESTATE P. LTD., (FORMERLY KNOWN AS B.RAHEJA BU ILDERS P. LTD.) PLOT NO. C - 30, G BLOCK, OPP. SIDBI BANK, BKC, BANDRA(E) MUMBAI 400051 / V. DCIT CEN CIR, 4(2) R.NO. 1918, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 ./ PAN : AAACB 1508 R ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. SANJAY P. SOMMA N I REVENUE BY : SHRI. MANOJ KUMAR SINGH, DR / DATE OF HEARING : 21.08.2018 / DATE OF PRONOUNCEMENT : 05 .10 .2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY ASSESSEE, BEING ITA NO. 6170/MUM/2016, IS DIRECTED AGAINST APPELLATE ORDER DATED 13.07.2016 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 52, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2012 - 13 , THE APPELLA TE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM ASSESSMENT ORDER DATED 26.03.2015 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2012 - 13 . I.T.A. NO.6170/MUM/2016 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - 1. IN UPHOLDING THAT THE AMOUNT PAYABLE BY THE A PPELLANT TO OM METALS LTD ('OM ) AND WELLWISHER CONSTRUCTION AND FINANCE PVT LTD ('WW') AMOUNTING TO RS.87.05 CRORES REFLECTED IN ITS BOOKS OF ACCOUNTS UNDER THE HEAD 'INVENTORIES', IS A NON - BUSINESS EXPENDITURE. 2. IN UPHOLDING THE DISALLOWANCE OF INTEREST EXPENSE ATTRI BUTABLE TO THE MONIES BORROWED FOR FINANCING THE PAYMENTS TO OM AND WW AND REDUCING SUCH INTEREST FROM THE VALUE OF 'INVENTORIES'. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPERS AND CONSTRUCTI ONS. T HE ASSESSEE IS INVOLVED IN THE DEVELOPMENT OF IT PARK SITUATED AT PLOT NO. I.T 5 (MIDC) AIROLI KNOWLEDGE PARK, NAVI MUMBAI. THE ASSESSMENT OF THE ASSESSEE FOR AY 2006 - 07 WAS REOPENED BY R EVENUE ON 28.05.2012 ON ACCOUNT OF AN AMOUNT OF RS. 1 00 .80 CROR E S PAID/PAYABLE BY THE ASSESSEE TO TWO PARTIES NAMELY M/S. WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. AND M/S OM METALS LIMITED . THE AMOUNT OF RS. 13.7 5 CRORE WERE REVERSED OUT OF THE AFORESAID AMOUNTS IN AY 2007 - 08. THE ASSESSEE HAD DEBITED INTEREST ATTRIBUTABLE ON THE AFORESAID AMOUNT DEBITED TO INVENTORY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IN AUDITED FINANCIAL STATEMENTS. IN THE YEAR UNDER CONSIDERATION , IT WAS OBSERVED BY THE AO THAT RS. 22. 17 CRORES WERE DEBITED BY THE ASSESSEE TO INTEREST AND FINANCE CHARGES WHICH INCLUDED BORROWING COSTS WITH RESPECT TO VARIOUS PAYMENT S INCLUDING PAYABLES TO M/S. WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. AND M/S. OM METALS LIMITED . S INCE THE PAYMEN TS TO THESE TWO AFORESAID PARTIES TO THE TUNE OF NET AMOUNT OF RS. 87.04 CRORES( AFTER REVERSAL OF RS. 13.75 CRORES) WERE ALREADY DISALLOWED BY THE AO CONSIDERING THE SAME TO BE SHAM TRANSACTIONS , THE BORROWING COST S MADE BY THE ASSESSEE ON ACCOUNT OF PAYM ENTS TO THESE TWO AFORESAID PARTIES WERE ALSO DISALLOWED FROM THE I.T.A. NO.6170/MUM/2016 3 INVENTORIES. THE AVERAGE RATE OF BORROWING BY THE ASSESSEE WERE WORKED OUT BY THE AO @13.5% PER ANNUM WHICH LED TO THE DISALLOWANCE OF INTEREST TO THE TUNE OF RS. 95,17,500/ - WITH RESPECT TO BORROWINGS ON AMOUNT PAID/PAYABLE TO THESE TWO PARTIES NAMELY M/S. WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. AND M/S. OM METALS LIMITED .THE AO OBSERVED THAT THE SAID AMOUNT OF RS. 95,17,500/ - WAS DEBITED TO INVENTORIES BY THE ASSESSEE WHICH STOOD DISALLOWED BY THE AO AND THE AO DIRECTED THE SAID SUM TO BE REDUCED FROM INVENTORIES IN THE FINANCIALS OF THE ASSESSEE , VIDE ASSESSMENT ORDER DATED 26.03.2015 PASSED U/S 143(3) BY THE AO , THE WORKING OF WHICH IS AS UNDER: - FROM TO DAYS PRINCIPAL AMT RATE OF INTEREST INTEREST WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. 01.04.2011 OM METALS LIMITED 01.04.2011 31.03.2012 31.03.2012 365 365 35,250,000 35,250,000 13.50% 13.50% 4,7 5 8,750 4,7 5 8,750 4,7 5 8,750 4,7 5 8,750 TOTAL 95,17,500 4 . THE MATTER REACHED LD. CIT(A) AT THE BEHEST OF THE ASSESSEE WHEREIN ASSESSEE FILED FIRST APPEAL BEFORE LEARNED CIT(A) , WHO BY FOLLOWING HIS OWN APPELLATE ORDER DATED 26.11.2015 FOR AY 2006 - 07 DISALLOWED THE SAID INTEREST OF RS. 95,17,500/ - O N BORROWINGS WITH RESPECT TO AMOUNT PAID/ PAYABLE TO M/S WELL WISHER CONSTRUCTIONS AND FINANCE PRIVATE LIMITED AND OM METALS LIMITED, WHICH WAS DEBITED BY THE ASSESSEE TO INVENTORIES/CLOSING WORK - IN - PROGRESS VIDE APPELLATE ORDER DATED 13.07.2016 . I.T.A. NO.6170/MUM/2016 4 5 . THAT I S HOW ASSESSEE HAS NOW COME BEFORE THE TRIBUNAL WHEREIN SECOND APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE DECISION OF LEARNED CIT(A) BEFORE THE TRIBUNAL . THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE ISSUE IN THIS APPEAL BEFORE TH E TRIBUNAL IS COVERED IN FAVOUR OF ASSESSEE BY MUMBAI - TRIBUNAL ORDER IN ITA NO. 1132,1133 & 1137/M UM/2016 FOR AY 2007 - 08, 2008 - 09 & 2006 - 07 RESPECTIVELY VIDE COMMON ORDER DATED 10.11.2017 IN ASSESSEES OWN CASE WHEREIN MUMBAI - TRIBUNAL HAS PASSED DETAILED ORDER UPHOLDING THE GENUINENESS OF THE PAYMENTS MADE/PAYABLE BY THE ASSESSEE TO AFORESAID PARTIES M/S. WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. AND M/S. OM METALS LIMITED TO THE TUNE OF RS. 100.80 CRORES FOR RELINQUISHING THEIR RIGHTS UNDER A JV AGREEMENT WHEREIN LAND OF 50 ACRES WAS ALLOTTED BY MIDC FOR SETTING UP I T PARK AT NAVI MUMBAI . THE SAID ORDER OF THE TRIBUNAL DATED 10.11.2017 IS PLACED ON RECORD BY THE ASSESSEE BEFORE THE TRIBUNAL WHICH IS PLACED IN FILE . FURT HER IT IS ALSO BROUGHT TO THE NOTICE OF THE BENCH THAT THE MUMBAI - TRIBUNAL VIDE COMMON ORDER DATED 19.03.2018 IN ITA NO. 1134, 1135 & 11 36/MUM/2016 FOR AY 2009 - 10, 2010 - 11 AND 2011 - 12 RESPECTIVELY HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LD. DR FAIRLY AGREED THAT SO FAR AS ISSUE IN PRESENT APPEAL ARE CONCERNED , THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY TRIBUNAL DECISION. AT THIS POINT OF TIME THE BENCH ASKED THE LD. COUNSEL FOR THE ASSESSEE TO SUBMIT THE DETAILS AS TO THE STATUS OF TH E PROJECT FOR WHICH SAID PLOT OF LAND ADMEASURING 50 ACRES WAS ACQUIRED BY THE ASSESSEE FROM MIDC AT N A VI MUMBAI FOR SETTING UP I T PARK A ND IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROJECT FOR SETTING UP I T PARK ON SAID PLOT OF LAND AT MUMBAI WA S STILL UNDER THE STAGE OF CONSTRUCTION DURING THE YEAR UNDER CONSIDERATION BEFORE THE TRIBUNAL . THE DIRECTIONS WERE ISSUED BY THE B ENCH TO LEARNED COUNSEL FOR THE ASSESSEE TO FILE COPIES OF AUDITED FINANCIAL STATEMENT S OF THE ASSESSEE FOR FINA NCIAL YEAR 2011 - 12 RELEVANT TO AY 2012 - 13 BEFORE US . IN COMPLIANCE THEREOF THE DIRECTIONS OF THE BENCH, THE LEARNED COUNSEL I.T.A. NO.6170/MUM/2016 5 HAS SUBMITTED AUDITED FINANCIAL STATEMENTS OF THE ASSESSEE FOR FINANCIAL TEAR 2011 - 12 WHICH ARE PLACED ON RECORD IN FILE. 6 . WE HAVE HEARD RIVAL PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD INCLUDING CITED DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS NAMELY FOR AY 2006 - 07 TO AY 2011 - 12 AND AUDITED FINANCIAL STATEMENTS FOR FINANCIAL YEAR 2011 - 12 . THE ASS ESSEE IS IN THE BUSINESS OF REAL EST ATE DEVELOPERS AND CONSTRUCTION . THE ASSESSEE WAS ALLOTTED 50 ACRES OF PLOT OF LAND BY MIDC IN FINANCIAL YEAR 2005 - 06 FOR DEVELOPING IT PARK AT PLOT NO. I.T 5 (MIDC) AIROLI KNOWLEDGE PARK, NAVI MUMBAI WHICH IT IS CLAIME D BY THE ASSESSEE WAS STILL UNDER CONSTRUCTION DURING THE YEAR UNDER CONSIDERATION . TO SUPPORT THE SAID CONTENTION, THE ASSESSEE HAS PLACED ON RECORD AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR 2011 - 12 WHICH IS PLACED IN FILE . T HE SHORT QUESTION WH ICH HAS ARISEN BEFORE US IN THIS APPEAL IS REGARDING ALLOW ABILITY OF INTEREST OF RS. 95,17,500/ - PAYABLE ON BORROW ED FUNDS FOR PAYING TO TWO ERSTWHILE JV PARTNERS NAMELY M/S. WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. AND M/S. OM METALS LIMITED TO THE TUNE OF RS. 87.04 CRORES ( RS. 100.80 CRORES LESS NET OF REVERSAL OF RS. 13.75 CRORES IN AY 2007 - 08) FOR RELINQUISHING THEIR RIGHTS AS JV PARTNERS IN 50 ACRE OF PLOT OF LAND ALLOTTED BY MIDC IN THE FINANCIAL YEAR 2005 - 06 AT NAVI MUMBAI FOR CONSTRUCTION O F IT PARK . THE REVENUE TREATED TRANSACTION S OF THE ASSESSEE FOR AMOUNT PAID/PAYABLE OF RS. 87.04 CRORES ( RS. 100.80 CRORES LESS NET OF REVERSAL OF RS. 13.75 CRORES IN AY 2007 - 08) TO THE SAID TWO JV PARTNERS NAMELY M/S. OM METALS LIMITED AND M/S WELL WI SHER CONSTRUCTIONS AND FINANCE P. LTD. FOR RELINQUISHING THEIR RIGHTS AS JV PARTNERS IN THE 50 ACRES OF PLOT OF LAND ALLOTTED BY MIDC AT NAVI MUMBAI AS SHAM TRANSACTIONS WHICH WAS ALSO LATER CONFIRMED BY LEARNED CIT(A) TO BE SHAM TRANSACTION IN THE AY 2006 - 07 ITSELF AND CONSEQUENTLY THESE PAYMENTS AS WELL INTEREST PAYABLE ON THESE LIABILITIES WERE DISALLOWED BY REVENUE AUTHORITIES TREATING THEM TO BE SHAM TRANSACTIONS WITH AN INTENT TO EVADE TAXES . T HE MUMBAI - TRIBUNAL VIDE ITS COMMON ORDER S I.T.A. NO.6170/MUM/2016 6 DATED 10.11.2017 UPHELD THE PAYMENTS OF RS. 87.04 CRORES ( RS. 100.80 CRORES LESS NET OF REVERSAL OF RS. 13.75 CRORES IN AY 2007 - 08) ENTERED INTO BY ASSESSEE WITH THE SAID TWO ERSTWHILE JV PARTNERS NAMELY M/S OM METALS LIMITED AND M/S WELL WISHER CONSTRUCT IONS AND FIN ANCE P. LTD. FOR ACQUIRING THE RIGHTS OF THESE TWO PARTIES IN THE SAID PLOT OF LAND ADMEASURING 50 ACRES ALLOTTED BY MIDC AT NAVI MUMBAI FOR SETTING UP I T PARK AS A GENUINE TRANSACTION S VIDE ITA NO. 1132, 1133 & 1137/MUM/2016 FOR AY 2007 - 08, 2008 - 09 AND 2006 - 07 RESPECTIVELY, VIDE COMMON ORDER DATED 10.11.2017 WHEREIN DEBIT TO INVENTORIES BY THE ASSESSEE OF THE SAID NET AMOUNT OF RS. 87.04 CRORES WAS UPHELD BY MUMBAI - TRIBUNAL TO BE GENUINE AND ALLOWABLE , BY H OLDING AS UNDER: - 5.8. WE HAVE CON SIDERED THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORDS PLACED BEFORE US INCLUDING CASE LAWS CITED BY THE PARTIES. THE UNDISPUTED FACTS ARE THAT THE LAND MEASURING 50 ACRES WAS ALLOTTED TO ASSESSEE AND TWO OTHER JV PARTNERS OM AND WW BY MIDC UPON A PAYMENT OF RS. RS.50,58,62,500/ - . THE JV PARTNERS DECIDED TO SURRENDER THEIR INTEREST IN THE LAND IN FAVOUR OF THE ASSESSEE UPON A PAYMENT OF 100.80 CR. THE NECESSARY SANCTION FOR THE SAID TRANSACTION WAS OBTAINED FROM MIDC. THE ASSESSEE ACCOUNTED AND PROV IDED FOR THE TRANSACTION IN ITS BOOKS OF ACCOUNTS AS ON 31.3.2006 BY INCREASING THE COST OF LAND/INVENTORIES AND CORRESPONDINGLY CREDITING THE TWO JV PARTNERS WITH RS. 50.40 CR EACH AND SHOWING THE REMAINING PAYABLE AT THE YEAR END UNDER THE HEAD SUNDRY CR EDITORS. THE TRANSACTION WAS ACCEPTED BY THE AO DURING THE SCRUTINY PROCEEDINGS AFTER RAISING SPECIFIC QUERY WHICH WAS REPLIED BY THE ASSESSEE BY FILING THE DETAILS OF INVENTORIES AND SUNDRY CREDITORS AND IT WAS ONLY AFTER SATISFYING HIMSELF, THE AO FRAMED ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 22.12.2008. IN THE MEAN TIME THE ASSESSMENT OF OM WAS COMPLETED FOR THE ASSESSMENT YEAR 2008 - 09 IN DECEMBER,2010 IN JAIPUR APPROXIMATELY TWO YEARS AFTER THE COMPLETION OF ASSESSMENT OF THE ASSESSEE AND THE AO AT JAIPUR FORWARDED COPY OF THE ASSESSMENT ORDER WITH RELEVANT ANNEXURES TO THE AO OF THE ASSESSEE. THEREAFTER THE AO ALSO SOUGHT THE DETAILS OF THE TRANSACTION FROM THE ASSESSEE VIDE LETTER DATED 19.05.2010 AND RE - OPENED THE CASE OF THE ASSESSEE BY IS SUING NOTICE U/S 148 OF THE ACT ON 25.05.2012 AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE FIRST PARA OF THE REASONS RECORDED BY THE AO, HE ADMITTED THAT THE ASSESSEE VIDE LETTER DATED 18.10.2008 SUPPLIED THE DETAILS OF SUNDRY CRED ITORS. THEREAFTER ,THE AO WHILE FRAMING ORDER U/S 143(3) R.W.S. 148 OF THE ACT REDUCED THE INVENTORIES OF THE ASSESSEE BY RS. 100.80 CR ON THE GROUND THAT THE TRANSACTION WAS A SHAM AND NON GENUINE DESPITE THE FACT THE SAME TRANSACTION WAS TREATED AS GENUI NE IN THE HANDS OF OM AND WW THE TWO JV PARTNERS TO WHOM THE ASSESSEE PAID RS. 50.40 CR EACH FOR ACQUIRING THE INTEREST IN THE LAND. IN THE CASE OF OM, THE RECEIPT FROM THE ASSESSEE WAS TREATED AS CAPITAL RECEIPT BUT THE SAME WAS TREATED AS REVENUE RECEIPT S BY THE AO IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT WHICH WAS ACCEPTED BY OM AND PAID DUE TAXES THEREON. IN THE CASE OF THE WW THE MONEY RECEIVED FROM THE ASSESSEE WAS TREATED AS CAPITAL RECEIPT AND MAT WAS PAID THEREON. THE AO ACCEPTED THE SAME I.T.A. NO.6170/MUM/2016 7 IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT HOWEVER THE CIT INVOKED REVISIONARY JURISDICTION U/S 263 OF THE ACT WHICH STOOD QUASHED BY THE ITAT. IN OTHER WORDS THE AMOUNTS PAID BY THE ASSESSEE TO OM AND WW WERE TAXED IN THEIR HANDS AS GENUINE TRANSACTION B Y THE DEPTT. IT IS DIFFICULT TO UNDERSTAND THAT WHEN THE REVENUE TREATED THE TRANSACTION AS GENUINE IN THE HANDS OF TWO JV PARTNERS , HOW THE SAME TRANSACTION CAN BE NON GENUINE AND SHAM IN THE HANDS OF THE ASSESSEE. MOREOVER THE CHRONOLOGY OF EVENTS CLEAR LY SHOWS THAT THE APPLICATION WAS MADE IN THE JOINT NAMES OF THE ASSESSEE, OM AND WW. THE LAND WAS ALSO ALLOTTED BY MIDC ON THE SAID APPLICATION MADE BY THE THREE JOINT VENTURE PARTNERS . THEREAFTER MIDC ON AN APPLICATION MADE BY THE JV PARTNERS APPROVED T HE RELINQUISHMENT OF INTEREST IN THE SAID LAND BY TWO JB (SIC. JV) PARTNERS OM AND WW IN FAVOUR OF THE ASSESSEE ON PAYMENT OF SPECIFIED PREMIUM. IT IS RELEVANT TO NOTE THAT RECORDS OF MIDC PROVED THAT THE ASSESSEE , OM AND WW WERE THE JOINT OWNERS OF THE PL OT OF LAND TILL THE RELINQUISHMENT OF RIGHTS BY OM AND WW WAS APPROVED BY MIDC WHICH SHOWED THE TRANSACTION BEING GENUINE AND OUT OF BUSINESS CONSIDERATION. A BUSINESS DECISION WAS TAKEN BY THE ASSESSEE TO PURCHASE THE INTEREST FROM TWO JV PARTNERS TO WHIC H TWO PARTNERS ALSO AGREED TO SELL THEIR INTEREST TO THE ASSESSEE WHICH IS ALSO A BUSINESS DECISION TAKEN BY THEM IN THE BEST INTEREST OF THE BUSINESS. MOREOVER ALL THE THREE PARTIES ARE UNRELATED PARTIES AND NOT RELATED TO EACH OTHER. THEREFORE THE TRANSA CTION CAN NOT BE SAID TO BE NON GENUINE AND SHAM. FURTHER WE FAILED TO UNDERSTAND AS TO HOW A TRANSACTION WHICH IS ASSESSED TO TAX IN THE HANDS OF TWO JV PARTNERS BY THE REVENUE TREATING THE SAME AS GENUINE WAS TREATED AS SHAM IN THE HANDS OF ASSESSEE. IN OUR CONSIDERED VIEW THE ASSESSEE HAS ENTERED INTO THE TRANSACTION OF PURCHASING THE INTEREST IN THE LAND FROM THE SAID TWO PARTIES AND AFTER PURCHASE, BECAME THE EXCLUSIVE OWNER OF THE SAID LAND AND THEREFORE THE SAID EXPENDITURE IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS AND SHOULD BE ALLOWED TO THE ASSESSEE. BESIDE, THE INVOLVEMENT OF MULTIPLE AGENCIES INCLUDING GOVT AUTHORITIES LIKE MIDC AND AOS OF OM AND WW , PROFESSIONAL CONSULTANTS AND ESCROW AGENTS SPECIALLY WHEN NONE OF THEM WERE RELATED TO EACH OTHER FURTHER LENDS CREDENCE TO THE CONTENTION OF THE LD AR. THE MERE IRREGULARITIES IN THE DOCUMENTS AS POINTED BY THE LD DR CAN NOT BE THE BASIS TO DRAW CONCLUSION AS TO GENUINENESS OF THE TRANSACTION. SO FAR AS THE REASONABLENESS OF THE TRANSACTION IS CONCERNED , THE VALUATION BY THE REGISTERED VALUER AND THE DVO WERE LARGELY SAME AND CAN NOT BE IGNORED AND LOST SIGHT OF WHILE DECIDING REASONABLENESS OF THE TRANSACTION. AFTER CONSIDERING THE RIVAL CONTENTIONS, RECORDS , WRITTEN SUBMISSIO NS AND CASE LAWS FILED BY BOTH THE PARTIES WE ARE OF THE VIEW THAT THE ORDER OF PCIT UPHOLDING THE ORDER OF AO TREATING THE PURCHASE OF INTEREST IN THE LAND FROM OM AND WW AS SHAM IS INCORRECT AND CAN NOT BE SUSTAINED. THE DECISIONS RELIED BY THE REVENUE A RE ALSO DISTINGUISHABLE ON FACTS AND THEREFORE NOT APPLICABLE. IN VIEW OF THE ABOVE DISCUSSIONS , WE SET ASIDE THE ORDER OF PCIT ON THIS ISSUE AND ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED. AO IS DIRECTED ACCORDINGLY. 6. THE ISSUE RAISED IN GROUND NO 3 IS AGAINST THE UPHOLDING OF DISALLOWANCE OF INTEREST PAID ON THE BORROWINGS TAKEN FOR PAYMENT TO WW AND OM AS DONE BY THE AO BY REDUCING THE COST OF INVENTORIES. 6.1. SINCE WE HAVE DECIDED THE GROUND NO 2 IN FAVOUR OF THE ASSESSEE HOLDING THE TRANSACTION TO BE TRUE ON THE GROUND THAT THE SAME TRANSACTION WHICH WAS TREATED AS GENUINE IN THE HANDS OF BOTH THE JB (SIC. JV) PARTNERS NAMELY WW AND OM, THE SAME CAN NOT BE HELD TO BE NON GENUINE AND SHAM IN THE HANDS OF ASSESSEE. IN VIEW OF THE SAID FINDINGS ANY I NTEREST WHICH THE ASSESSEE HAS INCURRED ON THE MONEY BORROWED I.T.A. NO.6170/MUM/2016 8 HAS TO BE ALLOWED TO THE ASSESSEE AND ACCORDINGLY WE DIRECT THE AO TO DELETE THE DISALLOWANCE. THE GROUND NO 3 IS ALLOWED. ITA NO.1132/MUM/2016 & ITA NO.1133/MUM/2016 7. THE ISSUES RAISED BY THE ASSESSEE IN THESE APPEALS ARE IDENTICAL AS HAVE BEEN DECIDED BY THE US IN ITA NO. 1137/MUM/2016. THEREFORE OUR DECISION IN ITA NO.1137/MUM/20146 WOULD ,MUTATIS MUTANDIS, APPLY TO THESE APPEALS AS WELL. ACCORDINGLY THE APPEALS OF THE ASSESSEE ARE PA RTLY ALLOWED. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. WE HAVE ALSO OBSERVED THAT LATER MUMBAI - TRIBUNAL VIDE COMMON ORDERS DATED 19.03.2018 IN ITA NO. 1134, 1135 & 1136/MUM/2016 FOR AY 2009 - 10 TO 2011 - 12 ALLOW ED THE BENEFIT OF DEDUCTION OF THE INTEREST PAID/PAYABLE BY THE ASSESSEE ON BORROWINGS WITH RESPECT TO THESE TWO PARTIES NAMELY M/S OM METALS LIMITED AND M/S WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. WRT THE SAME TRANSACTIONS OF PAYMENTS IN CONNECTION WI TH RELINQUISHMENT OF RIGHTS IN THE PLOT OF 50 ACRES ALLOTTED BY MIDC IN FAVOUR OF THE ASSESSEE AT NAVI MUMBAI FOR SETTING UP I T PARK , BY HOLDING AS UNDER: - 7. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE FINDING OF THE CIT(A) IN WHICH THE CIT(A) HAS CONFIRMED THE ORDER PASSED BY THE AO IN CONNECTION WITH AMOUNT PAYABLE TO TWO PARTIES NAMELY OM METALS LTD. AND WELLWISHER CONSTRUCTION & FINANCE PVT. LTD. AMOUNTING TO RS.87.05 CRORES REFLECTED IN ITS BOOKS OF ACCOUNTS UNDER THE HEAD OF INVENTORIES WHICH WAS HELD AS NON - BUSINESS EXPENDITURE. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THIS ISSUE HAS DULY BEEN COVERED BY THE FINDING OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO.1132, 1133 & 1137/M/2016 FOR THE A.Y . 2006 - 07, 2007 - 08 & 2008 - 09 DATED 10.11.2017. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE HONBLE ITAT IN THE ASSESSEES OW N CASE (SUPRA) ON RECORD. THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 5.8 WHICH IS HEREBY REPRODUCED BELOW AS UNDER: - 5.8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT RECORDS PLACED BEFORE US INCLUDING CASE LAWS CITED BY THE PAR TIES. THE UNDISPUTED FACTS ARE THAT THE LAND MEASURING 50 ACRES WAS ALLOTTED TO ASSESSEE AND TWO OTHER JV PARTNERS OM AND WW BY MIDC UPON A PAYMENT OF RS. RS.50,58,62,500/ - . THE JV PARTNERS DECIDED TO SURRENDER THEIR INTEREST IN THE LAND IN FAVOUR OF THE A SSESSEE UPON A PAYMENT OF 100.80 CR. THE NECESSARY SANCTION FOR THE SAID TRANSACTION WAS OBTAINED FROM MIDC. THE ASSESSEE ACCOUNTED AND PROVIDED FOR THE TRANSACTION IN ITS BOOKS OF ACCOUNTS AS ON 31.3.2006 BY INCREASING THE COST OF LAND/INVENTORIES AND COR RESPONDINGLY CREDITING THE TWO JV PARTNERS WITH RS. 50.40 CR EACH AND I.T.A. NO.6170/MUM/2016 9 SHOWING THE REMAINING PAYABLE AT THE YEAR END UNDER THE HEAD SUNDRY CREDITORS. THE TRANSACTION WAS ACCEPTED BY THE AO DURING THE SCRUTINY PROCEEDINGS AFTER RAISING SPECIFIC QUERY WHICH W AS REPLIED BY THE ASSESSEE BY FILING THE DETAILS OF INVENTORIES AND SUNDRY CREDITORS AND IT WAS ONLY AFTER SATISFYING HIMSELF, THE AO FRAMED ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 22.12.2008. IN THE MEAN TIME THE ASSESSMENT OF OM WAS COMPLETED F OR THE ASSESSMENT YEAR 2008 - 09 IN DECEMBER,2010 IN JAIPUR APPROXIMATELY TWO YEARS AFTER THE COMPLETION OF ASSESSMENT OF THE ASSESSEE AND THE AO AT JAIPUR FORWARDED COPY OF THE ASSESSMENT ORDER WITH RELEVANT ANNEXURES TO THE AO OF THE ASSESSEE. THEREAFTER T HE AO ALSO SOUGHT THE DETAILS OF THE TRANSACTION FROM THE ASSESSEE VIDE LETTER DATED 19.05.2010 AND RE - OPENED THE CASE OF THE ASSESSEE BY ISSUING NOTICE U/S 148 OF THE ACT ON 25.05.2012 AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THE FIRST PARA OF THE REASONS RECORDED BY THE AO, HE ADMITTED THAT THE ASSESSEE VIDE LETTER DATED 18.10.2008 SUPPLIED THE DETAILS OF SUNDRY CREDITORS. THEREAFTER ,THE AO WHILE FRAMING ORDER U/S 143(3) R.W.S. 148 OF THE ACT REDUCED THE INVENTORIES OF THE ASSESS EE BY RS. 100.80 CR ON THE GROUND THAT THE TRANSACTION WAS A SHAM AND NON GENUINE DESPITE THE FACT THE SAME TRANSACTION WAS TREATED AS GENUINE IN THE HANDS OF OM AND WW THE TWO JV PARTNERS TO WHOM THE ASSESSEE PAID RS. 50.40 CR EACH FOR ACQUIRING THE INTER EST IN THE LAND. IN THE CASE OF OM, THE RECEIPT FROM THE ASSESSEE WAS TREATED AS CAPITAL RECEIPT BUT THE SAME WAS TREATED AS REVENUE RE CEIPTS BY THE AO IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT WHICH WAS ACCEPTED BY OM AND PAID DUE TAXES THEREON. IN T HE CASE OF THE WW THE MONEY RECEIVED FROM THE ASSESSEE WAS TREATED AS CAPITAL RECEIPT AND MAT WAS PAID THEREON. THE AO ACCEPTED THE SAME IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT HOWEVER THE CIT INVOKED REVISIONARY JURISDICTION U/S 263 OF THE ACT WHIC H STOOD QUASHED BY THE ITAT. IN OTHER WORDS THE AMOUNTS PAID BY THE ASSESSEE TO OM AND WW WERE TAXED IN THEIR HANDS AS GENUINE TRANSACTION BY THE DEPTT. IT IS DIFFICULT TO UNDERSTAND THAT WHEN THE REVENUE TREATED THE TRANSACTION AS GENUINE IN THE HANDS OF TWO JV PARTNERS , HOW THE SAME TRANSACTION CAN BE NON GENUINE AND SHAM IN THE HANDS OF THE ASSESSEE. MOREOVER THE CHRONOLOGY OF EVENTS CLEARLY SHOWS THAT THE APPLICATION WAS MADE IN THE JOINT NAMES OF THE ASSESSEE, OM AND WW. THE LAND WAS ALSO ALLOTTED BY MIDC ON THE SAID APPLICATION MADE BY THE THREE JOINT VENTURE PARTNERS . THEREAFTER MIDC ON AN APPLICATION MADE BY THE JV PARTNERS APPROVED THE RELINQUISHMENT OF INTEREST IN THE SAID LAND BY TWO JB (SIC. JV) PARTNERS OM AND WW IN FAVOUR OF THE ASSESSEE ON PA YMENT OF SPECIFIED PREMIUM. IT IS RELEVANT TO NOTE THAT RECORDS OF MIDC PROVED THAT THE ASSESSEE, OM AND WW WERE THE JOINT OWNERS OF THE PLOT OF LAND TILL THE RELINQUISHMENT OF RIGHTS BY OM AND WW WAS APPROVED BY MIDC WHICH SHOWED THE TRANSACTION BEING GEN UINE AND OUT OF BUSINESS CONSIDERATION. A BUSINESS DECISION WAS TAKEN BY THE ASSESSEE TO PURCHASE THE INTEREST FROM TWO JV PARTNERS TO WHICH TWO PARTNERS ALSO AGREED TO SELL THEIR INTEREST TO THE ASSESSEE WHICH IS ALSO A BUSINESS DECISION TAKEN BY THEM IN THE BEST INTEREST OF THE BUSINESS. MOREOVER ALL THE THREE PARTIES ARE UNRELATED PARTIES AND NOT RELATED TO EACH OTHER. THEREFORE THE TRANSACTION CANNOT BE SAID TO BE NON GENUINE AND SHAM. FURTHER WE FAILED TO UNDERSTAND AS TO HOW A TRANSACTION WHICH IS ASS ESSED TO TAX IN THE HANDS OF TWO JV PARTNERS BY THE REVENUE TREATING THE SAME AS GENUINE WAS TREATED AS SHAM IN THE HANDS OF ASSESSEE. IN OUR CONSIDERED VIEW THE ASSESSEE HAS ENTERED INTO THE TRANSACTION OF I.T.A. NO.6170/MUM/2016 10 PURCHASING THE INTEREST IN THE LAND FROM THE SAID TWO PARTIES AND AFTER PURCHASE, BECAME THE EXCLUSIVE OWNER OF THE SAID LAND AND THEREFORE THE SAID EXPENDITURE IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS AND SHOULD BE ALLOWED TO THE ASSESSEE. BESIDE, THE INVOLVEMENT OF MULTIPLE AGENCI ES INCLUDING GOVT AUTHORITIES LIKE MIDC AND AOS OF OM AND WW, PROFESSIONAL CONSULTANTS AND ESCROW AGENTS SPECIALLY WHEN NONE OF THEM WERE RELATED TO EACH OTHER FURTHER LENDS CREDENCE TO THE CONTENTION OF THE LD AR. THE MERE IRREGULARITIES IN THE DOCUMENTS AS POINTED BY THE LD DR CANNOT BE THE BASIS TO DRAW CONCLUSION AS TO GENUINENESS OF THE TRANSACTION. SO FAR AS THE REASONABLENESS OF THE TRANSACTION IS CONCERNED, THE VALUATION BY THE REGISTERED VALUER AND THE DVO WERE LARGELY SAME AND CANNOT BE IGNORED AN D LOST SIGHT OF WHILE DECIDING REASONABLENESS OF THE TRANSACTION. AFTER CONSIDERING THE RIVAL CONTENTIONS, RECORDS, WRITTEN SUBMISSIONS AND CASE LAWS FILED BY BOTH THE PARTIES WE ARE OF THE VIEW THAT THE ORDER OF PCIT UPHOLDING THE ORDER OF AO TREATING THE PURCHASE OF INTEREST IN THE LAND FROM OM AND WW AS SHAM IS INCORRECT AND CANNOT BE SUSTAINED. THE DECISIONS RELIED BY THE REVENUE ARE ALSO DISTINGUISHABLE ON FACTS AND THEREFORE NOT APPLICABLE. IN VIEW OF THE ABOVE DISCUSSIONS, WE SET ASIDE THE ORDER OF P CIT ON THIS ISSUE AND ACCORDINGLY APPEAL OF THE ASSESSEE IS ALLOWED. AO IS DIRECTED ACCORDINGLY. 8. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE ASSESSEE ALONG WITH JV PARTNERS OM AND WW GOT ALLOTTED THE LAND MEASURING 50 ACRES UPON TH E PAYMENT OF RS.50,58,62,500/ - TO THE MIDC. THEREAFTER, THE JV PARTNERS DECIDED TO SURRENDER THEIR INTEREST IN THE LAND IN FAVOUR OF THE ASSESSEE UPON PAYMENT OF RS.100.80 CRORES. THE NECESSARY SANCTION WAS OBTAINED FROM MIDC. THE ASSESSEE ACCOUNTED AND PR OVIDED FOR THE TRANSACTION IN ITS BOOKS OF ACCOUNTS AS ON 31.03.2006 BY INCREASING THE COST OF LAND/INVENTORIES AND CORRESPONDINGLY CREDITING THE TWO JV PARTNERS WITH RS.50.40 CORES EACH AND SHOWING THE REMAINING PAYABLE AT THE YEAR END UNDER THE HEAD OF S UNDRY CREDITORS. THE TRANSACTION WAS ACCEPTED BY THE AO AT THE TIME OF SCRUTINY PROCEEDINGS. IN THE MEANTIME THE ASSESSMENT WAS COMPLETED FOR THE A.Y. 2008 - 09 IN DECEMBER, 2010 IN JAIPUR APPROXIMATELY TWO YEARS AFTER THE COMPLETION OF ASSESSMENT OF THE ASS ESSEE. THE ASSESSMENT ORDER WAS FORWARDED TO THE ASSESSEE BY THE ASSESSING OFFICER WHO REOPENED THE CASE OF THE ASSESSEE. IN THE CASE OF OM, THE AMOUNT TO THE TUNE OF RS.50.40 CRORES WAS TREATED AS REVENUE RECEIPT AND ACCORDINGLY THE TAXED. IN THE CASE OF WW THE MONEY RECEIVED FROM THE ASSESSEE WAS RECEIVED AS CAPITAL RECEIPT AND MAT WAS PAID THEREON. HOWEVER, THE CIT(A) INVOKED THE REVISIONARY JURISDICTION U/S 263 OF THE ACT WHICH WAS QUASHED BY THE ITAT. IN BRIEF THE AMOUNT WAS PAID BY THE ASSESSEE TO OM AND WW WERE TAXED IN THEIR HAND AS GENUINE TRANSACTION BY THE DEPARTMENT. WHEN THE TRANSACTION HAS ALREADY BEEN TREATED AS GENUINE THEN THERE IS NO GROUND TO TREAT THE SAME AS SHAM TRANSACTION IN FURTHER REASSESSMENT ORDER. MOREOVER, THE CASE OF THE ASSESS EE BASED ON FACTUAL POSITION WHICH HAS DULY BEEN EXPLAINED BY THE HONBLE ITAT WHILE PASSING THE ORDER IN THE ASSESSEES OWN CASE BY VIRTUE OF ORDER DATED10.11.2017. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE PRESENT ISSUE HAS DULY BEEN COVERED BY THE ASSESSEES OWN CASE(SUPRA). ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO 3: - 9. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION OF INTEREST UPON THE PAYMENT MADE TO OM AND WW. THIS ISSUE HAS ALREADY BEEN I.T.A. NO.6170/MUM/2016 11 COVERED BY THE ASSESSEES OWN CASE DATED 10.11.2017 (SUPRA). THE RELEVANT FINDING IS HEREBY REPRODUCED BELOW AS UNDER: - 6.1. SINCE WE HAVE DECIDED THE GROUND NO 2 IN FAVOUR OF THE ASSESSEE HOLDING THE TRANSACTION TO BE TRUE ON THE GROUND THAT THE SAME TRANSACTION WHICH WAS TREATED AS GENUINE IN THE HANDS OF BOTH THE JB PARTNERS NAMELY WW AND OM, THE SAME CAN NOT BE HELD TO BE NON GENUINE AND SHAM IN THE HANDS OF ASSESSEE. IN VIEW OF THE SAID FINDINGS ANY INTEREST W HICH THE ASSESSEE HAS INCURRED ON THE MONEY BORROWED HAS TO BE ALLOWED TO THE ASSESSEE AND ACCORDINGLY WE DIRECT THE AO TO DELETE THE DISALLOWANCE. 10. IN VIEW OF THE SAID CIRCUMSTANCES, WHEN THE ADDITION HAS BEEN DELETED FINDING GENUINE CASE OF THE ASSES SEE, THEREFORE, THE INTEREST WHICH HAS BEEN INCURRED UPON THE BORROWED MONEY IS LIABLE TO BE ALLOWED. THEREFORE, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA NOS.1135/M/2016& 1136/M/2016: - 11. ALL THE ISSUES RAISED IN THESE APPEALS ARE IDENTICAL TO THE ISSUES WHICH HAVE BEEN ADJUDICATED BY US IN ITA. NO.1134/M/2016, THEREFORE, THE DECISION IN THE ITA. NO. 1134/M/2016 IS ALSO APPLIED TO THESE APPEALS. ACCORDINGLY, THESE APPEALS OF THE ASSESSE E ARE HEREBY PARTLY ALLOWED. 12. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE HEREBY PARTLY ALLOWED . WE DURING THE COURSE OF HEARING DIRECTED ASSESSEE TO FILE AUDITED FINANCIAL STATEMENT OF THE ASSESSEE FOR THE FINANCIAL YEAR 2011 - 12 (AY 2012 - 13) WH ICH WAS COMPLIED WITH BY THE ASSESSEE . IT IS UNDISPUTED THAT INTEREST OF RS. 95,17,500/ - WAS DEBITED TO INVENTORIES/PROJECT WORK - IN - PROGRESS BY THE ASSESSEE IN RETURN OF INCOME FILED WITH THE TRIBUNAL. T HE TRIBUNAL IN ASSESSEES OWN CASE FOR THE PRECEDIN G YEARS AS DETAILED BY US IN PRECEDING PARAS OF THIS ORDER HAD HELD THAT AMOUNT PAYABLE/PAYMENTS MADE TO THESE TWO PARTIES NAMELY M/S OM METALS LIMITED AND M/S WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. TO THE TUNE OF RS. 87.04 CRORES IN AY 2006 - 07 ( NET OF REVERSAL OF RS. 13.7 5 CRORES IN AY 2007 - 08) BY THE ASSESSEE FOR ACQUIRING THEIR RIGHTS IN THE 50 ACRE PLOT ALLOTTED BY MIDC IN NAVI MUMBAI FOR SETTING UP IT PARK WAS A GENUINE TRANSACTION WHICH STOOD ALLOWED BY TRIBUNAL . FURTHER, THE TRIBUNAL HAS AL SO CONSEQUENTLY HELD THAT INTEREST EXPENSES ATTRIBUTABLE TO BORROWINGS FOR MAKING PAYMENTS TO THESE TWO PARTIES NAMELY M/S OM METALS LIMITED AND M/S WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. ARE ALSO ALLOWABLE AS GENUINE EXPENSES. RESPECTFULLY FOLLOWIN G THE AFORESAID DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS CONSISTENTLY FROM AY 2006 - 07 TO I.T.A. NO.6170/MUM/2016 12 2011 - 12, WE ALLOW INTEREST EXPENDITURE OF RS. 95,17,500/ - ATTRIBUTABLE TO AFORESAID BORROWINGS W.R.T. TO PAY MENT TO THESE TWO PARTIES NAMELY M/S OM METALS LIMITED AND M/S WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. AS GENUINE EXPENSES TO BE ALLOWED TO THE ASSESSEE AS DEDUCTION WHILE COMPUTING BUSINESS INCOME . THE ASSESSEE ACQUIRED THE SAID PLOT OF LAND ADME A SURING 50 ACRES AT NAVI MUMBAI FOR SETTING UP I T PARK IN FINANCIAL YEAR 2005 - 06 FROM MIDC AND AGREEMENT FOR ACQUIRING RIGHTS OF THESE TWO ERSTWHILE JV PARTNERS BY THE ASSESSEE FOR RS. 100.80 CRORES (LATER RS. 13.75 CRORES STOOD REVERSED IN AY 2007 - 08) WAS ALSO EX ECUTED IN FINANCIAL YEAR 2005 - 06. THE ASSESSEE IS SETTING UP IT PARK AT NAVI MUMBAI WHICH IS STILL UNDER THE STAGE OF CONSTRUCTION EVEN DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE IS ENGAGED IN BUSINESS OF REAL ESTATE DEVELOPMENTS AND CONSTRUCTION. T HE ASSESSEE HAS CARRIED THE COST OF THE SAID I T PARK BEING DEVELOPED/CONSTRUCTED BY THE ASSESSEE AS INVENTORIES /PROJECT WORK - IN - PROGRESS . THE BORROWINGS MADE BY THE ASSESSEE ON WHICH INTEREST EXPENDITURE WERE INCURRED WERE ALL MAINLY DIRECTED TOWARDS W ORKING CAPITAL FOR DEVELOPMENT/CONSTRUCTION OF THE AFORESAID I T PARK INCLUDING ACQUISITION COST OF THE PLOT OF LAND AND ALSO ACQUIRING RIGHTS FROM THE ERSTWHILE JV PARTNERS . THE ASSESSEE IS CONTINUOUSLY DEBITING INTEREST COST TO THE CARRYING COST OF INVEN TORIES/PROJECT WORK - IN - PROGRESS. THE ASSESSEE DEBITED RS. 95,17,500/ - TOWARDS INTEREST FOR BORROWING WRT ACQUISITION COSTS FOR ACQUIRING INTEREST OF ERSTWHILE JV PARTNERS NAMELY M/S OM METALS LIMITED AND M/S WELL WISHER CONSTRUCTIONS AND FINANCE P. LTD. IN THE CARRYING COST OF INVENTORIES/PROJECT WORK - IN - PROGRESS DURING THE YEAR UNDER CONSIDERATION . THE REVENUE TREATED THE ENTIRE TRANSACTION AS SHAM AND HENCE THIS INTEREST ALSO GOT DISALLOWED . THE MUMBAI - TRIBUNAL HAS CONSISTENTLY SINCE AY 2006 - 07 TO 2011 - 12 HAS HELD THE AFORESAID TRANSACTIONS FOR ACQUISITION OF RIGHTS FROM ERSTWHILE JV PARTNERS BY THE ASSESSEE IN 50 ACRES OF PLOT OF LAND ALLOTTED BY MIDC IN NAVI MUMBAI FOR SETTIN UP I T PARK AND CONSEQUENTLY PAYMENT OF INTEREST AS GENUINE TRANSACTION ALLO WABLE AS BUSINESS DEDUCTION WHILE COMPUTING INCOME . RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF MUMBAI - TRIBUNAL IN ASSESSEES OWN CASE FOR PRECEDING YEARS AS OUTLINED I.T.A. NO.6170/MUM/2016 13 ABOVE, WE ALLOW THE CLAIM OF THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS ALLOWED. WE ORDER ACCORDINGLY. 7. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.6170/MUM/2016 FOR AY 2012 - 13 IS ALLOWED. ORDER PRONO UNCED IN THE OPEN COURT ON 0 5 .10 .2018. 0 5 .10 .2018 S D / - S D / - (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 5 .10 .2018 NISHANT VERMA SR. PRIVATE SECRETARY COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED, MUMBAI 4. THE CIT - CONCERNED, MUMBAI 5. THE DR BENCH, 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI