DLF Info City Developers (Kolkata) Ltd., Gurgaon V. ACIT, Circle- I, Gurgaon

ITA 894/DEL/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2212 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Business income; Rule of consistency; Proportionate interest; Set aside
• Section: 143(3); 80IA; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.894/DEL/2018 ASSESSMENT YEAR: 2012-13 DLF INFO CITY DEVELOPMENT (KOLKATA) LIMITED, 3 RD FLOOR, SHOPPING MALL COMPLEX, ARJUN MARG, DLF CITY PHASE-1, GURUGRAM PAN NO. AABCD9621N VS. ACIT CIRCLE- I GURUGRAM (APPELLANT) (RESPONDENT) APPELLANT BY SH. R. S. SIGHVI, CA SH. SATYAJEET GOEL, CA RESPONDENT BY MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEARING: 22/08/2019 DATE OF PRONOUNCEMENT: 20/11/2019 ORDER PER R.K PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 30.11.2017 OF CIT(A)-I, GURGAON RELATIN G TO A.Y. 2012-13. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVE LOPMENT, DEVELOPMENT OF INTEGRATED TOWNSHIP, TECHNOLOGY PARK S ETC. AND RENTING OF CONSTRUCTED PROPERTIES. IT FILED ITS RET URN OF INCOME ON PAGE | 2 30.09.2012 DECLARING TOTAL INCOME OF RS.7,85,61,480 /-WHICH WAS REVISED TO RS.7,85,61,580/- ON 31.03.2014. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.24,56 ,00,048/- AS DEDUCTION U/S. 80IA IN RESPECT OF PROFIT DERIVED FR OM THE INDUSTRIAL PARK UNIT COMPUTED AS PER FORM NO. 10 CC B DULY CERTIFIED BY CHARTERED ACCOUNTANT. HE, THEREFORE, A SKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DEDUCTION U/S. 80 IA SHOULD NOT BE RECOMPUTED BY ALLOCATING APPROPRIATE EXPENSES OF EMPLOYEES COST TOWARDS THE PROFIT OF THE INDUSTRIAL DEVELOPME NT PARK UNIT. HE NOTED THAT THE ASSESSEE COMPANY HAS WORKED OUT A N AMOUNT OF RS.7,85,61,515/- OUT OF OTHER INCOME OF RS.28,19 ,27,000/- AS THE INCOME NOT QUALIFYING FOR DEDUCTION U/S. 80IA. FURTHER, THE EXPENSES TO THE TUNE OF RS. 20,33,65,000/- OUT OF T HE EXPENSES OF RS.110,18,44,000/- DEBITED TO THE PROFIT AND LOSS A CCOUNT HAVE BEEN ALLOCATED TOWARDS THE OTHER INCOME TO AVAIL TH E MAXIMUM BENEFIT OF DEDUCTION U/S. 80IA. HE, THEREFORE, ALL OCATED 10% OF THE EXPENSES OF EMPLOYEES COST OF RS.1,19,79,000/- I.E. 11,97,900/- OUT OF THE EXPENSES TO RS.20,33,65,000/ - ALLOCATED TOWARDS THE OTHER INCOME AS ALLOCATED TOWARDS THE I NCOME DERIVED FROM THE INDUSTRIAL PARK UNIT. HE ACCORDINGLY RECOM PUTED THE DEDUCTION U/S. 80IA AND MADE ADDITION TO RS.11,97,9 00/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. IN APPEAL THE LD. CIT(A) DELETED THE ADDITION OF RS.11,97,900/- ON ACCOUNT OF ALLOCATION OF 10% EMPL OYEES COST TO THE INDUSTRIAL PARK. HE, HOWEVER, NOTED THAT THE A SSESSEE HAD CLAIMED INTEREST EXPENDITURE OF RS.20,30,27,153/- A GAINST THE PAGE | 3 INTEREST INCOME OF RS.28,15,88,633/- WHICH ACCORDIN G TO HIM WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. HE, T HEREFORE, ISSUED AN ENHANCEMENT NOTICE TO THE ASSESSEE ASKING HIM TO EXPLAIN AS TO WHY THE INCOME OF THE ASSESSEE SHOULD NOT BE ENH ANCED TO THIS EXTENT AS THE INTEREST INCOME HAS TO BE TAXED UNDER INCOME FROM OTHER SOURCES SINCE THE INTEREST EXPENDITURE ON TE RM LOAN TAKEN FROM THE BANK IS NOT AN ALLOWABLE EXPENDITURE AGAIN ST THE INTEREST INCOME WHICH IS ON ACCOUNT OF LOANS GIVEN TO RELATE D PARTIES. 5. THE ASSESSEE OBJECTED TO THE PROPOSED ENHANCEMEN T NOTICE ON THE GROUND THAT THE SAME IS BEYOND THE JURISDICT ION OF THE CIT(A) SINCE HE CANNOT INTRODUCE A NEW SOURCE OF IN COME. IT WAS ARGUED THAT THE INTEREST INCOME IN THE CASE OF THE ASSESSEE WAS TAXABLE UNDER THE HEAD BUSINESS INCOME. IT WAS FUR THER ARGUED THAT EVEN IF THE INTEREST INCOME IS TAXABLE UNDER T HE HEAD INCOME FROM OTHER SOURCES, THE INTEREST EXPENDITURE AMOUN TING TO RS.2030.27 LACS IS AN ALLOWABLE EXPENDITURE U/S.57 (III) OF THE IT ACT. RELYING ON VARIOUS DECISIONS, IT WAS ARGUED T HAT SUCH INTEREST EXPENDITURE IS ALLOWABLE AS EXPENDITURE U/ S. 57 (III) FROM SUCH INTEREST INCOME. 6. HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH T HE ARGUMENTS ADVANCED BY THE ASSESSEE. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT THE LD. CIT(A) CANNOT INTRODUCE A NEW SOURCE OF INCOME IS CONCERNED HE HELD THAT THERE IS NO NEW SO URCES OF INCOME PROPOSED IN THE NOTICE OF ENHANCEMENT. AS PE R THE RETURN OF INCOME FILED, THE ASSESSEE HAD SHOWN OTHER INCOM E OF RS.2819.27 LACS. THE ASSESSEE HAD CLAIMED THE INTER EST EXPENDITURE OF RS.2030.27 LACS AGAINST THE INTEREST INCOME AND PAGE | 4 THE BALANCE AMOUNT OF RS.785.62 LACS WAS OFFERED FO R TAXATION. HE NOTED THAT THE AO IN THE ASSESSMENT ORDER HAS HELD THAT OUT OF THIS EXPENDITURE CLAIMED OF RS.2030.27 LACS, AN AMO UNT OF RS.11,97,900/- BEING PROPORTIONATE EMPLOYEE COST WA S REQUIRED TO BE ALLOCATED TOWARDS INCOME FROM INDUSTRIAL PARK . HOWEVER, IN THE PROPOSED NOTICE OF ENHANCEMENT IT WAS PROPOSED THAT THE WHOLE OF INTEREST EXPENDITURE OF RS.2030.27 LACS WA S REQUIRED TO BE ALLOCATED TO INDUSTRIAL PARK AND THE INTEREST IN COME OF RS.2815.89 LACS IS REQUIRED TO BE TAXED UNDER THE H EAD INCOME FROM OTHER SOURCES. THEREFORE, THE CONTENTION OF THE ASSESSEE IS NOT TENABLE. HE HELD THAT THE POWER OF THE FIRST AP PELLATE AUTHORITY IS WIDE AND CANNOT BE CURTAILED. IT HAS THE POWER TO ADJUDICATE AND DECIDE EVERYTHING NECESSARY TO ASCERTAIN THE TR UE AND CORRECT INCOME OF THE ASSESSEE. HIS POWERS ARE COTERMINOUS WITH THAT OF THE AO AND HE CAN DO ANYTHING WHICH THE AO FAILED T O DO. 7. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT THE INTEREST INCOME IN THE ASSESSEES CASE IS TAXABLE UNDER THE HEAD BUSINESS INCOME IS CONCERNED, HE ALSO REJECTED THE SAME. FUR THER ARGUMENT THAT IN THE EARLIER YEARS AND IN SUBSEQUEN T YEAR SUCH INTEREST INCOME HAS BEEN TAXED AS BUSINESS INCOME W AS ALSO REJECTED BY HIM ON THE GROUND THAT THE PRINCIPLE OF RE-JUDICATA IS NOT APPLICABLE TO THE PROCEEDINGS UNDER THE INCOME TAX ACT. FURTHER WHEN THE PREVIOUS DECISION IS PLAINLY ERRON EOUS THERE IS A DUTY OF THE COURT TO REVIEW IT AND NOT PERPETUATE T HE MISTAKE. 8. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT SUCH INTEREST EXPENDITURE IS AN ALLOWABLE EXPENDITURE U/S. 57 (II I) IS CONCERNED HE ALSO REJECTED THE SAME BY RELYING ON THE DECISIO N OF HONBLE PAGE | 5 SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMI CALS AND FERTILIZERS LTD. REPORTED IN 227 ITR 172 AND VARIOU S OTHER DECISIONS. HE ACCORDINGLY ENHANCED THE INCOME AND DIRECTED THE AO TO COMPUTE THE INCOME OF RS.28,15,89,000/- AS AG AINST THE RETURNED INCOME OF RS.7,85,61,550/-. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS :- 1.1 THAT CIT(A) HAS ERRED ON FACTS AND IN LAW IN RE-COM PUTING DEDUCTION U/S 80IA OF THE ACT AT RS. 4,25,72,564 AS AGAINST RS. 24,56,00,048 CLAIMED BY THE APPELLANT IN THE RETURN AND ALLOWED BY THE ASSESSING OFFICER AT RS 2 4,44,02,148 IN THE ASSESSMENT ORDER DATED 13.03.2015 U/S 143(3) OF THE ACT. 1.2 THAT THE LD. CIT(A) HAS ERRED IN REDUCING RS. 20,30 ,27,153/- BEING INTEREST FROM THE INCOME OF INDUSTRIAL PARK ELIGIBLE FOR DEDUCTION UN DER SECTION 80IA AND, AT THE SAME TIME, COMPUTING TAXABLE INCOME FROM OTHER SOURCES ( INTEREST) AT RS. 28,15,89,000/- WITHOUT ALLOWING BENEFIT OF NETTING OF INTEREST. 1.3 THAT THE LD. CIT (A), WHILE EXERCISING POWERS U/S 2 51(1) OF THE ACT HAS FAILED CONSIDER AND APPRECIATE THAT IT IS NOT WITHIN THE R EALM OF THE APPELLATE AUTHORITY TO INTRODUCE A NEW SOURCE OF INCOME, WHICH HAS NEITHER BEEN CONSIDERED NOR DISCUSSED IN THE IMPUGNED ASSESSMENT ORDER. 1.4 THAT THE LD. CIT(A), HAS FAILED TO CONSIDER AND AP PRECIATE THAT THE INTEREST INCOME IN THE CASE OF THE APPELLANT HAS BEEN ASSESSED UNDE R THE HEAD BUSINESS INCOME AND NETTING OF INTEREST HAS BEEN ALLOWED IN THE EAR LIER YEARS AND AS SUCH, IN ABSENCE OF ANY CHANGE IN FACTS, THE IMPUGNED ADDITION IS IN DISREGARD TO RULE OF CONSISTENCY. 1.5 THAT THE LD. CIT (A) HAS WRONGLY RELIED UPON THE AP EX COURT DECISION IN THE CASE OF TUTIKORAN ALKALIS 227 ITR 172 AS SAME IS DISTINGUISHABLE ON FACTS AND NOT APPLICABLE TO THE PRESENT CASE. 1.6 THAT THE LD. CIT(A) HAS ERRED IN TREATING THE INTER EST ON LOANS AS INCOME FROM OTHER SOURCES' AND , AT THE SAME TIME, THE INTERES T PAID ON THE AMOUNTS GIVEN ON LOAN AS BUSIN ESS E X PENDITURE , I.E., NOT ALLOWING NET TI NG OF INTEREST WHICH IS PATENTLY PAGE | 6 INCORRECT AND WRONG AS BOTH THE ITEMS I.E. RECEIPTS AND EXPENDITURE NEED TO BE TREATED UNDER THE SAME HEAD I.E., BUSINESS INCOME' OR OTHER SOURCES. 2. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED ASSESSING OFFICER WHILE RE-COMPUTING DEDUCTION U/S 80IA OF THE ACT HAS ERRE D IN LAW, IN MAKING DISALLOWANCE OF RS.11,97,900 ON ACCOUNT OF 10% OF EMPLOYEE COST ON WHOLLY ERRONEOUS, ILLEGAL AND UNTENABLE GROUNDS. 2.1 THAT THE LD. ASSESSING OFFICER HAS FAILED TO CONSID ER AND APPRECIATE THAT SUCH SUM HAS ALREADY BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THEREFORE, THE DISALLOWANCE HAS RESULTED INTO DEDUCTION OF THE SAME EXPENDITURE TWICE. 3. THAT THE ORDER DATED 30.11.2017 PASSED U/S 250(6) O F THE ACT IS BAD IN LAW. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R, CHANGE, VARY, SUBSTITUTE OR RAISE ANY ADDITIONAL GROUND OF APPEAL IF IT BECOMES NECES SARY TO DO SO IN THE INTEREST OF JUSTICE ON OR BEFORE THE DATE OF HEARING. 10. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET DID NOT PRESS GROUND OF APPEAL NO. 2 AND 2.1 FOR WHICH THE LD. DR HAS NO OBJECTION. ACCORDINGLY THE SAME ARE DISMISSED. 11. GROUND NO.3 AND 4 BEING GENERAL IN NATURE ARE D ISMISSED. 12. SO FAR AS THE GROUND NO. 1.1 TO 1.6 ARE CONCERN ED, THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE PAPER BOO K PAGE NO. 21 TO 30 DREW THE ATTENTION OF THE BENCH TO THE FORM N O. 10 CCB DULY CERTIFIED BY THE AUDITORS AND SUBMITTED THAT THERE IS NO CLAIM OF DEDUCTION U/S.80IA ON SUCH INTEREST INCOME AND EXPE NDITURE. REFERRING TO PAGE NO.18 OF THE ORDER OF LD. CIT(A) HE SUBMITTED THAT IN THE EARLIER AND SUBSEQUENT YEARS THE INTERE ST INCOME HAS BEEN TAXED AS BUSINESS INCOME. FURTHER THE ASSESSEE ITSELF HAS EXCLUDED BOTH THE INTEREST INCOME AND INTEREST EXPE NDITURE. PAGE | 7 THEREFORE, IT IS NOT PROPER ON THE PART OF THE CIT( A) TO INTRODUCE A NEW SOURCE OF INCOME AND ISSUE THE NOTICE OF ENHANC EMENT. 13. REFERRING TO THE DECISION OF THE COORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF LG ELECTRONICS INDIA PRIVAT E LIMITED VS. ACIT VIDE ITA NO.3612&3613/DEL/2017 ORDER DATED 18. 07.2018 FOR A.Y. 2005-06 AND 2006-07, HE SUBMITTED THAT THE TRIBUNAL RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SARDARI LAL AND CO. REPORTED IN 251 ITR 864 AND THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF RAM INFRASTRUCTURE LIMITED VS. JCIT VIDE ITA NO.746/DEL /2013 ORDER DATED 30.12.2016 HAS HELD THAT WHEN THERE IS NO DIS CUSSION OF ANY SUCH DISALLOWANCE EITHER IN THE RETURN OF INCOM E OR IN THE ASSESSMENT ORDER THE DISALLOWANCE MADE BY THE CIT(A ) BY DISCOVERING A NEW SOURCE OF INCOME IS NOT SUSTAINAB LE IN LAW. 14. SO FAR AS THE DEDUCTION U/S. 57 (III) IS CONCER NED THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO VARIOUS DECIS IONS SUBMITTED THAT WHEN THERE IS A DIRECT NEXUS BETWEEN EARNING O F INTEREST ON LOAN ADVANCED BY THE ASSESSEE AND PAYMENT OF INTERE ST TO THE BANK ON LOAN DRAWN IN TERMS OF SANCTION LETTER, ASS ESSEE IS ENTITLED TO NETTING OFF INTEREST IN TERMS OF SECTIO N 57 (III) AND SUCH CLAIM WAS TO BE ALLOWED. HE ACCORDINGLY SUBMITTED THAT BOTH LEGALLY AND FACTUALLY THE LD. CIT(A) IS NOT JUSTIFI ED IN ENHANCING THE INCOME AND NOT ALLOWING NETTING OFF. HE ALSO R ELIED ON THE FOLLOWING DECISIONS :- PAGE | 8 A. PR. CIT VS. JUBILANT ENERGY NELP V P LTD. [2019] 10 2 TAXMANN.COM 97 (DEL) B. VODAFONE SOUTH LTD. VS. CIT [2015] 378 ITR 410 (DEL ) C. ITO VS. M/S. BRAHMA ASSOCIATES (ITA 133/PN/13) (ITA T PUNE) D. CIT VS. BOKARO STEELS LTD. 236 ITR 315 (SC) 15. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). SHE SUBMITTED THAT THE LD. CIT(A) HAS N OT INTRODUCED ANY NEW SOURCE OF INCOME AND HAS ONLY RECALCULATED / RECOMPUTED SUCH INCOME. FURTHER THE LD. CIT(A) HAS GIVEN VALID REASONS AS TO WHY SUCH INTEREST INCOME CANNOT BE TREATED AS BUSINESS INCOME AND WHY PRINCIPLE OF RE-JUDICA TA WILL NOT BE APPLICABLE. HE HAS ALSO GIVEN JUSTIFIABLE REASO NS AS TO WHY THE INTEREST EXPENDITURE OF RS.2030.27 LACS IS NOT AN ALLOWABLE EXPENDITURE U/S. 57 (III) OF THE IT ACT. SHE ACCOR DINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD. 16. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT CASE HAS RECOMPUTED THE DEDUCTION CLAIMED B Y THE ASSESSEE U/S.80IA AND ALLOCATED 10% OF EXPENSES OF THE EMPLOYEE COST TO THE OTHER INCOME AND THEREBY REDUC ING THE DEDUCTION CLAIMED U/S. 80IA TO THE EXTENT OF RS.11, 97,900/-. HE ACCORDINGLY MADE ADDITION OF RS.11,97,900/- TO THE TOTAL INCOME PAGE | 9 OF THE ASSESSEE. WE FIND THE LD. CIT(A) DELETED TH E ABOVE ADDITION MADE BY THE AO BUT ISSUED AN ENHANCEMENT N OTICE TO THE ASSESSEE ON THE GROUND THAT ASSESSEE HAS CLAIME D INTEREST EXPENDITURE OF RS.2030.27 LACS FROM THE INTEREST IN COME OF RS.2819 LACS IS NOT IN ACCORDANCE WITH LAW. ACCORD ING TO THE CIT(A) THE INTEREST INCOME RS.2815.89 LACS IS REQUI RED TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AN D THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 57 OF TH E INTEREST EXPENDITURE. WHILE DOING SO HE RELIED ON THE DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF TUTICORIN ALKA I CHEMICALS AND FERTILIZERS (SUPRA) AND DISTINGUISHED THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF BOKARO STEELS LIMITED REPORTED IN 102 TAXMAN.COM 94. HE ALSO REJECTED THE ARGUMENT O F THE ASSESSEE THAT SUCH INTEREST WAS ALWAYS TREATED AS B USINESS INCOME BY THE AO IN THE PRECEDING AND SUBSEQUENT YE ARS ON THE GROUND THAT PRINCIPLE OF RE-JUDICATA IS NOT APPLICA BLE TO INCOME TAX PROCEEDINGS AND IF THE PREVIOUS DECISION IS PLA INLY ERRONEOUS, IT IS THE DUTY OF THE COURT TO RECTIFY I T AND NOT PERPETUATE THE MISTAKE. 16.1 IT IS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THERE IS NO DISCUSSION OF SUCH DISALLOWANCE IN THE ASSESSMENT ORDER, THE LD. CIT(A) CANNOT ISSUE THE E NHANCEMENT NOTICE BY DISCOVERING A NEW SOURCE OF INCOME. IT I S ALSO HIS SUBMISSION THAT SUCH INTEREST INCOME WAS ALWAYS OFF ERED AND TAXED AS BUSINESS INCOME AND, THEREFORE, IN VIEW OF THE CONSISTENT VIEW OF THE DEPARTMENT IN THE PRECEDING AS WELL AS SUBSEQUENT YEARS THE INTEREST INCOME HAS TO BE TAXE D AS PAGE | 10 BUSINESS INCOME BY FOLLOWING RULE OF CONSISTENCY. IT IS ALSO HIS SUBMISSION THAT THE ASSESSEE IS ENTITLED TO CLAIM D EDUCTION U/S.57 (III) IN RESPECT OF SUCH INTEREST EXPENDITUR E OUT OF THE INTEREST INCOME EVEN IF SUCH INTEREST INCOME IS TAX ABLE UNDER THE HEAD FROM INCOME FROM OTHER SOURCES. 17. WE FIND MERIT IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE THAT SUCH INTEREST EXPENDI TURE IS AN ALLOWABLE EXPENDITURE U/S.57 (III) EVEN IF THE SAID INTEREST INCOME IS CONSIDERED AS INCOME FROM OTHER SOURCES B Y DEVIATING FROM THE STAND OF THE DEPARTMENT IN THE PRECEDING A S WELL AS SUBSEQUENT ASSESSMENT YEARS WHEN SUCH INTEREST INCO ME HAS BEEN TREATED AS BUSINESS INCOME. 18. A PERUSAL OF THE ORDER OF CIT(A) SHOWS THAT AS SESSEE HAD GIVEN THE BIFURCATION OF INTEREST INCOME ON LOANS A ND ADVANCES TO PARTIES AND THE INTEREST EXPENDITURE ON SUCH BOR ROWINGS AND HAS SHOWN NET INTEREST INCOME OF RS. 7,85,61,480/- ON WHICH NO DEDUCTION U/S. 80 IA HAS BEEN CLAIMED. THE COMP UTATION OF NET INTEREST INCOME AS REPRODUCED BY CIT(A) AT PAGE 5 OF HIS ORDER IS AS UNDER :- PARTICULARS AMOUNT (RS.) INTEREST INCOME ON LOANS & ADVANCES ( TO PARTIES) CARAF BUILDERS AND CONSTRUCTION PVT. LTD. & ORS. 23,96,54,357 INTEREST INCOME ON INCOME TAX REFUND 41,925,436 PAGE | 11 INTEREST INCOME ON DELAYED PAYMENT 8,840 (UNDER THE HEAD OTHER OPERATING INCOME) 28, 15,88,633 LESS : PROPORTIONATE INTEREST EXPENSES (PERTAINING TO LOAN GIVEN TO CARAF BUILDERS & CONSTRUCTION PVT. LTD. ) OUT OF BORROWINGS 20,30,27,153 NET INTEREST INCOME 7,85,61,480 FROM THE ABOVE IT IS CLEAR THAT THERE IS A DIRECT N EXUS BETWEEN THE INTEREST INCOME OF RS.23.96 LAKHS AND INTEREST EXPENDITURE OF RS. 20.30 LAKHS. 19. WE FIND THE HONBLE DELHI HIGH COURT IN THE CAS E OF VODAFONE SOUTH LIMITED VS. CIT (SUPRA), AFTER CONSI DERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TU TICORIN ALKAI CHEMICALS AND FERTILIZERS LTD. (SUPRA) HAS HELD THA T WHERE ASSESSEE HAVING AVAILED OF LOAN FROM HSBC, ADVANCED SAID AMOUNT TO ITS HOLDING COMPANY, I.E. SCL AND SINCE T HERE WAS A DIRECT NEXUS BETWEEN EARNING OF INTEREST ON LOAN AD VANCED BY ASSESSEE TO SCL AND PAYMENT OF INTEREST TO HSBC ON LOAN DRAWN IN TERMS OF SANCTION LETTER, ASSESSEES CLAIM FOR NETTING OFF OF INTEREST IN TERMS OF SECTION 57 (III) WAS TO BE ALLOWED. PAGE | 12 20. SIMILARLY THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. JUBILANT ENERGY NELP V P LTD. (SUPRA) HAS HEL D THAT WHERE ASSESSEE PAID INTEREST TO SISTER CONCERN ON MONEY B ORROWED AND SUBSEQUENTLY IT EARNED INTEREST INCOME ON INTER-COR PORATE DEPOSITS (ICDS), SINCE THERE WAS DIRECT NEXUS BETW EEN INTEREST PAID AND INTEREST EARNED, INTEREST PAID TO SISTER C ONCERN WAS DEDUCTABLE UNDER SECTION 57 WHILE BRINGING INTEREST INCOME TO TAX AS INCOME FROM OTHER SOURCES. 21. THE VARIOUS OTHER DECISIONS RELIED BY THE LD. C OUNSEL FOR THE ASSESSEE ALSO SUPPORT HIS CASE THAT SUCH INTERE ST EXPENDITURE HAS TO BE ALLOWED AS DEDUCTION FROM SUC H INTEREST INCOME IF SUCH INTEREST INCOME IS TREATED AS INCOME FROM OTHER SOURCES. WE, THEREFORE, HOLD THAT THE ASSESSEE IS E NTITLED TO NETTING OF OFF INTEREST EXPENDITURE AND INTEREST IN COME. 22. WE FURTHER FIND THE ASSESSEE BEFORE THE CIT(A) HAS GIVEN THE FOLLOWING DETAILS AND CONTENDED THAT IN THE EAR LIER YEARS AND SUBSEQUENT YEARS THE INTEREST INCOME AND INTEREST E XPENDITURE WAS ALLOWED FOR NETTING OFF. 23. THEREFORE, EVEN IF THE PROPOSITION LAID DOWN BY THE CIT(A) THAT PRINCIPLE OF REJUDICATA IS NOT APPLICABLE TO T HE INCOME TAX PAGE | 13 PROCEEDINGS IS ACCEPTED, HOWEVER, THE RULE OF CONSI STENCY HAS TO BE FOLLOWED. SINCE THE REVENUE IN THE PRECEDING AS WELL AS SUBSEQUENT YEARS HAS ACCEPTED SUCH NETTING OFF OF I NTEREST EXPENSES FROM SUCH INTEREST INCOME, THEREFORE, ON T HIS SCORE ALSO THE ASSESSEE IS ENTITLED TO NETTING OFF. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THE GROUNDS ON THIS ISSUE. SINCE THE ASSESSEE SUCCEEDS ON THE ALTERNAT E GROUND AS PER GROUND APPEAL NO. 1.1 TO 1.6 EXCEPT 1.3, THE GR OUND CHALLENGING THE POWER OF THE CIT(A) TO ENHANCE THE INCOME BY INTRODUCING A NEW SOURCE OF INCOME AS PER THE GROUN D OF APPEAL NO. 1.3 IS NOT ADJUDICATED BEING ACADEMIC IN NATURE . 24. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.11.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:- 20.11.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 14 DATE OF DICTATION 24.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.11.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 20.11.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 20.11.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 20.11.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 20.11.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.1 1.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER