ITO, New Delhi V. M/s. Rational Builders & Developers, New Delhi

ITA 670/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6988 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 30-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NANDITA KANCHAN
• Keywords: Unexplained cash credit; Question of law; Notional interest
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SRI G.D. AGARWAL, HONBLE V.P. AND SRI C.M. GARG, JM ITA NO. 670/DEL./2014 : A SSTT. YEAR : 2010-11 ITO WARD-31(1) NEW DELHI VS RATIONAL BUILDERS & DEVELOPERS 9 TH FLOOR, DLF CENTRE SANSAD MARG NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAFFR2590B ASSESSEE BY : SH. R.S. SINGHVI, CR REVENUE BY : MRS. NANDITA KANCHAN, C.I.T., DR DATE OF HEARING : 30.05.2016 DATE OF PRONOUNCEMENT : 01.07.2016 ORDER PER C.M.GARG, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAISNT THE ORDER OF THE CIT(A)-XXVI, NEW DELHI DATED 4.11.2013 PASSED IN FI RST APPEAL NO. 228/2012- 13 FOR AY 2010-11. THE SOLE GROUND RAISED BY THE REVENUE READ AS FOLL OWS : THE CIT(A) HAS ERRED IN DELETING REASONABLE ADDIT ION OF RS. 7332666/- @ 12% MADE BY THE AO ON ACCOUNT OF NOTION AL INTEREST CHARGED ON INTEREST FREE ADVANCES. 2. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES A ND CAREFULLY PERUSED THE MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. THE LD. ASSESSEES REPRESENTATIVE ITA NO.670/DEL/2014 RATIONAL BUILDERS & DEVELOPERS 2 (AR) SUBMITTED A COPY OF THE ORDER OF THE ITAT, NEW DELHI F BENCH DATED 29.10.2014 PASSED IN ASSESSEES OWN APPEAL FOR AY 2 009-10 AND CONTENDED THAT THE SIMILAR ISSUE OF NOTIONAL INTEREST HAS BEEN DEC IDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL. THE LD. AR ALSO SUBMITTED A COPY O F THE ORDER DATED 11.8.2015 OF HONBLE HIGH COURT OF DELHI PASSED IN ITA NO. 55 9/2015 AND CONTENDED THAT THE REVENUES APPEAL AGAINST THE ORDER OF THE TRIBU NAL FOR AY 2009-10 (SUPRA) HAS BEEN DISMISSED BY HONBLE JURISDICTIONAL HIGH C OURT AND THE ISSUE OF NOTIONAL INTEREST HAS BEEN SETTLED IN FAVOUR OF THE ASSESSEE WHICH ALSO COVERED THE SAME ISSUE FOR AY 2010-11. 3. THE DR STRONGLY SUPPORTED THE ACTION OF THE AO . HOWEVER, WE COULD NOT POINTED OUT ANY BASIS TO US WHICH COULD LEAD US TO TAKE A DIFFERENT VIEW IN FAVOUR OF THE REVENUE KEEPING ASIDE THE ORDER OF THE TRIBU NAL WHICH HAS BEEN CONFIRMED BY HONBLE HIGH COURT, ON THE ISSUE OF NO TIONAL INTEREST. 4. IN VIEW OF ABOVE SUBMISSIONS OF BOTH THE SIDE S, FROM THE ORDER OF HONBLE HIGH COURT DATED 11.8.2015 IT IS AMPLY CLEAR THAT T HE ISSUE OF NOTIONAL INTEREST HAS BEEN FINALLY DECIDED IN FAVOUR OF THE ASSESSEE, DISMISSING THE APPEAL OF THE REVENUE WITH FOLLOWING OBSERVATIONS :- 3. THE REVENUE HAS FILED THE PRESENT APPEAL AGA ISNT AN ORDER DATED 29 TH OCTOBER, 2014 PASSED BY THE INCOME TAX APPELLATE T RIBUNAL (ITAT) IN ITA NO. 2988/DEL/2013 FOR THE ASSESSMEN T YEAR (AY) 2009-10. 4. THE FIRST ISSUE CONCERNS THE ADDITION OF RS. 2,88,98,869/- UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (ACT) ON A CCOUNT OF UNEXPLAINED CASH CREDITS. IT HAS BEEN CONCURRENTLY HELD BY BOTH THE CIT(A) AS WELL AS ITAT THAT THE CREDITORS IN QUESTI ON WERE HAVING RUNNING ACCOUNTS WITH THE ASSESSEE AND THAT THE BAL ANCE BELONGED TO THE EARLIER YEARS. THERE WAS NO FRESH CREDIT DURING THE YEAR IN QUESTION. THE COURT FINDS NO SUBSTANTIAL QUESTION O F LAW ARISES IN THE ABOVE FACTS AS FAR AS THIS ISSUE IS CONCERNED. 5. THE SECOND ISSUE CONCERNS THE ADDITION OF RS. 90,50,000/- ON ACCOUNT OF NOTIONAL INTEREST ON INTEREST FREE LOANS /ADVANCES. THE ITAT ITA NO.670/DEL/2014 RATIONAL BUILDERS & DEVELOPERS 3 HAS RIGHTLY OBSERVED THAT THERE IS NO PROVISION FOR TAXING NOTIONAL INCOME AS EXPLAINED BY THE SUPREME COURT IN EXCEL I NDUSTRIES 358 ITR 295 (SC). CONSEQUENTLY, NO SUBSTANTIAL QUESTION OF LAW ARISES AS REGARDS THIS ISSUE AS WELL. THE APPEAL IS DISMISSED . 5. ON THE BASIS OF ABOVE, WE ARE INCLINED TO HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF H IGH COURT DATED 11.8.2015 (SUPRA) AND SOLE GROUND OF REVENUE DEVOID OF MERITS IS NOT SUSTAINABLE AND THUS WE DISMISS THE SAME. 6. CONSEQUENTLY, APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE COURT ON 01/07/2016. SD/- SD/- ( G.D.AGARWAL ) (C.M.GARG) VICE PRESIDENT J UDICIAL MEMBER DATED: 01 / 07/2016 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) ITA NO.670/DEL/2014 RATIONAL BUILDERS & DEVELOPERS 4 DATE INITIAL 1. DRAFT DICTATED ON 03.06.2016 2. DRAFT PLACED BEFORE AUTHOR 03.06.2016 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.