ITO ward- 15(3), New Delhi V. Logix Buidltech (P) Ltd., New Delhi

ITA 7031/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0944 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-10-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 22-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘E’ : NEW DELHI) BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.7031/Del/2019 (Assessment Year : 2016-17) ITO, Ward- 15(3), New Delhi Vs. M/s. Logix Buildtech Private Limited, 85, Ground Floor, World Trade Tower, Barakhamba Lane, New Delhi-110001 PAN : AABCL7527R Appellant Respondent Revenue by Sh. Jeetender Chand, Sr. DR Assessee by Ms. Shweta Bansal, CA Date of hearing: 10.10.2022 Date of Pronouncement: 13.10.2022 ORDER Per Anubhav Sharma, JM : The appeal has been filed by the Revenue against order dated 29.05.2019 in appeal no. Del/CIT(A)-5/0187/2018-19 New Delhi in assessment year 2016- 17 passed by Commissioner of Income Tax (Appeals)-5, New Delhi (hereinafter referred to as the First Appellate Authority or in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 21/12/2018 u/s 143(3) 7031/Del/2019 M/s. Logix Buildtech (P) Ltd. 2 of the Income Tax Act, 1961 passed by ITO, Ward-15(3), New Delhi (hereinafter referred to as the Assessing Officer or ‘AO’). 2. The facts in brief are the the appellant is engaged in the business of real estate. The appellant was allotted land by Noida Authority in FY 2010-11. Since the appellant is in the business of real estate, the land acquired by the appellant is stock in trade of the business and all other cost incurred on such land is capitalized in project cost (work in progress). The appellant has taken the land from Noida Authority on lease. The assessee has entered into a lease agreement with Noida Authority. As per agreement the appellant is liable to pay installment of Rs. 13,79,88,2.81.25/- p. a. along with the interest @ 11 percent p.a. for 10 years. The Noida Authority has also charged interest @ 3 percent p.a. for delay in payment of interest as well as installment which is duly mentioned in the lease agreement. The Noida Authority charged interest @11 percent p.a. because it has allowed credit period of 10 years to the appellant for the payment of cost of land. Similarly, the authority has charged interest @ 3 percent for allowing further credit period to the amount due/payable. Ao ivoked Sec 37 for capitalization and disallowed penal interest as expense and Ld CIT(A) had deleted the same. 3. Heard. It was pointed out by Ld. Counsel for assessee that assessee’s own case vide ITA No. 1374/Del/2019, A.Y. 2015-16 was heard in co-ordinate Bench in which one of us was in the quorum and has decided the issue in favour of the assessee and dismissed the appeal of revenue. 4. Ld. DR could not point out any distinction of facts. 5. The revenue is in appeal raising following grounds :- “1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the disallowance of Rs. 9,50,96,953/- on account of Penal Interest to new Okhla Industrial Development Authority and in directing the AO not to reduce the said amount and allow it to be capitalized under project expenses. 7031/Del/2019 M/s. Logix Buildtech (P) Ltd. 3 2. The appellant craves to be allowed to add any fresh ground(s0 of appeal and/ or delete or amend any of the ground(s) of appeal.” 6. In assessee’s own case the aforesaid ground has been decided against the Revenue. The relevant findings in para no. 7 and 8 are reproduced below :- 7. Giving thoughtful consideration to the matter on record the Bench is of considered opinion that the penal interest arises out of default in payment of installment / lease rent as per the schedule agreed and the normal interest along with penal interest compounded half yearly was agreed to be paid on the default amount and for the default period as an exception, otherwise the ordinary outcome of default was a cancellation of allotment. Thus, the ld. CIT(A) was correct in observations that this interest is not payable on account of any offences or any prohibition in law or any infraction of law but relates to delay in payment of the lease amount as per the agreement. 8. Further, the Bench is of considered view that the once the assessee has capitalized all the expenses in regard to work in progress, no distinction can be made between ordinary interest and penal interest for the purpose of capitalization. Thus, there is no merit in the grounds raised by revenue. 7. In the light of aforesaid, the grounds of revenue have no substance and the appeal of Revenue is dismissed. Order pronounced in the open court on 13 th October, 2022. Sd/- Sd/- (ANIL CHATURVEDI) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 13 .10.2022 *Binita, SR.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI