NINE GLOBE BUILDERS, MUMBAI V. ACIT 21 (2), MUMBAI

ITA 7260/MUM/2019

AI Insights

The case involves M/s. Nine Globe Builders, a partnership firm engaged in property development, which appealed against the disallowance of interest on certain borrowings for the Assessment Year 2014-15. The Assessing Officer had disallowed interest payments amounting to Rs. 36,22,680 on loans from Navkar Developers, SRK Developers, and Girish Parekh, questioning the business purpose of these borrowings. The assessee argued that these were not new borrowings but rolled over from the previous year, a point not initially raised before the lower authorities. The Tribunal found this argument to be a new plea and restored the matter to the Assessing Officer for further examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132757 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 15-12-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 25-11-2019
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

आयकर य कर म ु ंबई ठ “ ब ”, म ु ंबई ठ क , य यक य ए ं गगन गोय , ेख क र य के म$ IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B ”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI GAGAN GOYAL , ACCOUNTANT MEMBER आ ं. 7260/म ु ं/ 2019 ( न. .2014-15) ITA NO. 7260/MUM/2019(A.Y. 2014-15) M/s. Nine Globe Builders, B-2, Marathon Nextgen Innova, V.S.Lane, Off. S.B.Marg, Lower Parel (W),Mumbai 400 013. PAN: AAHFN-4211-D ...... * /Appellant बन म Vs. ACIT-21(2), Mumbai 115, Piramal Chambers,Lalbaug, Parel, Mumbai – 400 012. ..... + , /Respondent * - र / Appellant by : Shri Nishit Gandhi + , - र /Respondent by : Ms.Samruddhi Dhananjay Hande ु न ई क. , / Date of hearing : 16/12/2023 /ो0 क. , / Date of pronouncement : 10/03/2023 आदेश/ ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax(Appeals)-33, Mumbai [in short ‘the CIT(A)’ ] dated 23/09/2019 for Assessment Year 2014-15. 2 ITA NO. 7260/MUM/2019(A.Y. 2014-15) 2. The assessee in appeal has assailed disallowance of interest u/s. 36(1)(iii) of the Income tax Act 1961 [in short ‘the Act’] in respect of the following parties: Amount of Loans (i) Navkar Developers - Rs. 2.92,89,000/- (ii) SRK Developers - Rs. 7,00,000/- (iii) Girish Parekh - Rs. 2,00,000/- Total : Rs. 3,01,89,000/- 3. Shri Nishit Gandhi appearing on behalf of the assessee submits that the assessee is a partnership firm engaged in the business of development and redevelopment of properties. The assessee filed its return of income for Assessment Year 2014-15 declaring total income of Rs.34,50,590/-. During the period relevant to the assessment year under appeal the assessee earned interest income of Rs.30,25,005/- on loans and advances given to various parties. The assessee also paid interest of Rs.1,69,59,002/- on borrowings. In scrutiny assessment proceedings the Assessing Officer questioned interest payment to Navkar Developers, SRK Developers and Girish Parekh, from whom the assessee had borrowed funds aggregating to Rs.3,01,89,000/-. The Assessing Officer disallowed Rs.36,22,680/- being interest @ 12% on the aforesaid amount u/s. 36(1)(iii) of the Act. The ld. Authorized Representative for the assessee submits that the assessee had made borrowings from the aforesaid three parties for the purpose of business. The ld. Authorized Representative for the assessee further contended that in any case, no new borrowings were from aforesaid parties in the impugned assessment year. The amounts reflected in accounts of the assessee against said parties are rolled over from preceding Assessment Years. In the preceding Assessment 3 ITA NO. 7260/MUM/2019(A.Y. 2014-15) Year no question was raised by the Assessing Officer, hence, no disallowance can be made in respect of such advances in the Assessment Year under appeal. 4. Per contra, Ms.Samruddhi Dhananjay Hande representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. Departmental Representative submits that the assessee failed to submit any cogent reason for the disproportionate payment of interest, the Assessing Officer has rightly disallowed interest payment u/s. 36(1)(iii) of the Act. 4. We have heard the submissions made by rival sides and have perused the orders of authorities below. The short contention of the assessee is that the interest has been paid by the assessee to Navkar Developers, SRK Developers and Girish Parekh, on advances received in the preceding Assessment Years, no fresh advances were purportedly received by the assessee during the impugned assessment year. We find that this is a fresh plea raised by assessee before the Tribunal. This plea was not raised by the assessee either before the Assessing Officer or before the CIT(A). Therefore, we deem it appropriate to restore this issue to the file of Assessing Officer for re-examination. In case it is found that the advances on which interest has been disallowed u/s. 36(1)(iii) of the Act were rolled over from the preceding Assessment Year and no fresh advances were taken by the assessee in the impugned assessment year from the parties mentioned above i.e. Navkar Developers, SRK Developers and Girish Parekh, no disallowance u/s. 36(1)(iii) of the Act is warranted. The appeal of assessee is thus, allowed for statistical purpose in the terms aforesaid. 4 ITA NO. 7260/MUM/2019(A.Y. 2014-15) 5. In the result, appeal by the assessee is allowed for statistical purposes. Order pronounced in the open court on Friday the 10 th day of March , 2023. Sd/- Sd/- (GAGAN GOYAL) (VIKAS AWASTHY) ेख क र य/ACCOUNTANT MEMBER य यक य/JUDICIAL MEMBER म ु ंबई/ Mumbai, 1 न ंक/Dated 10/03/2023 Vm, Sr. PS(O/S) े Copy of the Order forwarded to : 1. */The Appellant , 2. + , / The Respondent. 3. The PCIT 4. आयकर आय ु 2, CIT 5. 3 ग य + , न , आय. . ., म ु बंई/DR, ITAT, Mumbai 6. ग 56 7 8 /Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar), ITAT, Mumbai