DCIT., (Exemptions), Hyderabad, Hyderabad V. A.P. State Housing Corporation Ltd., Hyderabad

ITA 9/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6437 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 01-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIBENDU MOHARANA
• Assessee Lawyers: N O N E
• Section: 139(5); 148

Judgement Text

ITA NO 9 OF 2015 AP STATE HOUSING CORPORATION LTD H YDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO. 9/HYD/2015 (ASSESSMENT YEAR: 2007-08) DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD VS. A.P. STATE HOUSING CORPORATION LTD HYDERABAD PAN: AABCA 7206 L (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI SIBENDU MOHARANA, DR FOR ASSESSEE : N O N E DATE OF HEARING : 14.6.2016 DATE OF PRONOUNCEMENT : 17 .6.2016 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2007-08. IN TH IS APPEAL THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT (A ) IN ALLOWING THE CLAIM OF INTEREST EXPENDITURE AS CLAIMED BY THE ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N AOP ENGAGED IN THE BUSINESS OF PROVIDING HOUSING FACILI TIES TO PEOPLE IN GENERAL AND TO WEAKER SECTIONS OF THE SOCIETY IN PARTICULAR HAS FILED ITS RETURN OF INCOME FOR THE A.Y 2007-08 ON 3 0.03.2009. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) AND THERE AFTER REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT. DURING TH E RE- ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE AS SESSEE CORPORATION MOBILISED LOANS FROM INTERNATIONAL INST ITUTIONS AND ITA NO 9 OF 2015 AP STATE HOUSING CORPORATION LTD H YDERABAD PAGE 2 OF 5 COMMERCIAL BANKS FOR EXECUTING THE CONSTRUCTION OF HOUSES FOR THE POOR AND THE LOANS FORMED PART OF THE PROJECT C OST I.E. LOAN TO BENEFICIARIES. HE OBSERVED THAT THE ASSESSEES CORP ORATION RECOVERS LOAN AMOUNT FROM THE BENEFICIARY BUT DOES NOT OFFER THE SAME AS INCOME, INSTEAD IT IS SHOWN AS A LIABILITY, BUT ON COMPLETION OF THE PROJECT, THE SAME IS DEBITED. HE OBSERVED THAT SINCE THE CORPORATION DOES NOT OFFER THE LOAN RECOV ERIES FROM BENEFICIARIES AS ITS INCOME AND ALSO SINCE THE PRIN CIPAL AND INTEREST PAYMENTS MADE TO COMMERCIAL BANKS AND FINA NCIAL INSTITUTIONS TO THE GOVERNMENT IS TREATED AS LOAN, THE INTEREST PAYMENT CANNOT BE TREATED AS EXPENDITURE IN THE HAN DS OF THE ASSESSEE. HE, THEREFORE, DISALLOWED THE CLAIM OF IN TEREST ON LOANS AND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT (A) WHO DELETED THE SAME BY F OLLOWING THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y 2006- 07. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. THE LEARNED DR, WHILE RELYING UPON THE ORDER OF THE AO, SUBMITT ED THAT THOUGH THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE EARLIER YEARS, THE DEPARTMENT HAS FILED APPEAL IN THE HIGH COURT AND HENCE THE DECISION HAS NOT ATTAINED FINAL ITY. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND , RELIED UPON THE ORDERS OF ITAT IN ITS OWN CASE FOR A.Y 2006-07. 3. HAVING REGARD TO THE RIVAL CONTENTIONS, WE FIND THAT THE CIT (A) AT PARA 4.1 TO 4.3 OF HIS ORDER HAS FOLLOWED TH E ORDER OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y 2006-07 AND HAS HELD AS UNDER: 4.1 THE ISSUE IN THE FIRST GROUND OF APPEAL HAS BEE N ADJUDICATED UPON IN PRECEDING YEARS BY THE ITAT IN ITS ORDER ITA NO 9 OF 2015 AP STATE HOUSING CORPORATION LTD H YDERABAD PAGE 3 OF 5 IN ITA NO.376 TO 381/HYD/2010, FOR THE AYS 2002-03 TO 2006-07 WHERE THE ITAT HELD AS FOLLOWS: '5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE ID. COUNSEL FOR THE ASSESSEE CLEARLY PROVED THA T THE ASSESSEE COMPANY IS NOT IN THE BUSINESS OF CONSTRUCTION OF HOUSES. HENCE, THERE IS NO QUESTION OF OFFERING INCOME FROM THE CONSTRUCTION ACTIVITY. WE FIND THAT THE INCOME OF THE ASSESSEE CORPORATION ON LY COMPRISES OF ADMISSION FEES, SUPERVISIONS CHAGES, INTEREST, DIFFERENTIAL COST OF CEMENT AND OTHER MAT ERIAL AND MANAGERIAL SUBSIDY FROM THE STATE GOVERNMENT. WE FIND MERIT IN THE ARGUMENT OF THE ID. COUNSEL FO R THE ASSESSEE THAT, DUE TO THE G.O'S ISSUED BY THE STATE GOVERNMENT FROM TIME-TO-TIME FOR ONE TIME SETTLEMENT OF DUES OR WAIVER OF INTEREST, THE ASSES SEE CORPORATION IS NOT COLLECTED ANY INTEREST FROM THE BENEFICIARIES AND ALSO THE PRINCIPAL AMOUNT IN SEVE RAL CASES. HOWEVER, IT IS FACT THAT SOME AMOUNTS ARE RECOVERED FROM THE BENEFICIARIES AND THE SAME ARE SHOWN AS 'RECOVERIES FROM THE BENEFICIARIES' IN THE BALANCE SHEET. THERE IS NO DISPUTE WITH REGARD TO T HE PAYMENT OF INTEREST TO THE BANK AND FINANCIAL INSTITUTIONS. THE DEPARTMENT DISALLOWED THE ENTIRE INTEREST PAYMENT MADE BY THE ASSESSEE CORPORATION ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT OFFERE D ANY INCOME ON INTEREST RECOVERED FROM ITS BENEFICIARIES. AFTER CONSIDERING THE TOTALITY OF FA CTS AND THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE VI EW THAT THE LOWER AUTHORITIES ARE NOT CORRECT IN DISALLOWING THE INTEREST PAYMENT TO VARIOUS COMMERCIAL BANKS AND FINANCIAL INSTITUTIONS. HENCE, WE ALLOW THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE. HOWEVER, WE DIRECT THE ASSESSEE CORPORATION TO FURNISH THE DETAILS OF INTERESTS RECEIVED FROM ITS BENEFICIARIES FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION AND WE DIRECT THE ASSESSING OFFICER T O TREAT THE SAID INTEREST RECEIPTS AS THE INCOME OF T HE ASSESSEE CORPORATION IN THE RESPECTIVE ASSESSMENT YEARS. ACCORDINGLY, THE GROUND RAISED BY THE ASSESS EE IS PARTLY ALLOWED AS INDICATED ABOVE.' ITA NO 9 OF 2015 AP STATE HOUSING CORPORATION LTD H YDERABAD PAGE 4 OF 5 4.2 THE ASSESSING OFFICER HAD MADE THE NECESSARY EN QUIRIES FOR THE AYS COVERED BY THE ITAT ORDER AND SINCE THE APPELLANT HAD BEEN UNABLE TO SUBMIT THE INFORMATION FOR 23 DISTRICTS OF ANDHRA PRADESH, THE AO HAD ESTIMATED T HE INCOME FROM INTEREST AT 15% OF THE RECOVERY AMOUNT VIDE HIS ORDERS DATED 31.01.2013. 4.3 THE AR HAS ADMITTED THAT THE APPELLANT WAS IN A SIMILAR POSITION OF INABILITY TO FURNISH THE INFORM ATION FOR THE CURRENT YEAR IN APPEAL. THE AO IS THEREFORE, DIRECT ED TO BRING THE INTEREST TO TAX IN THE LIGHT OF THE DIRECTIONS OF THE ITAT IN THE APPELLANTS OWN CASE FOR THE PRECEDING YEARS. F URTHER, IN THE EVENT THAT THE APPELLANT IS UNABLE TO SUBMIT TH E REQUISITE INFORMATION, THE AO IS DIRECTED TO BRING TO TAX 15% OF THE RECOVERIES MADE BY THE APPELLANT DURING THE YEAR IN KEEPING WITH HIS OWN DECISION IN THE PRECEDING YEARS. THE F IRST GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WI TH THE SAME AS THE CIT (A) HAS ONLY FOLLOWED THE PRECEDENT ON THE ISSUE. THUS, GROUNDS 2 TO 4 ARE REJECTED. 4. AS REGARDS GROUND NO.5 THAT CIT (A) ERRED IN ALL OWING THE ASSESSEES CLAIM OF SET OFF OF CARRY FORWARD OF LOS S EVEN THOUGH THE ASSESSEE HAS FILED FINAL ACCOUNTS BEYOND THE TI ME SPECIFIED U/S 139(5) OF THE ACT, WE FIND THAT THE CIT (A) HAS ONLY DIRECTED THE AO TO ALLOW SET OFF OF THE BROUGHT FORWARD LOSS ES AS DETERMINED IN THE ASSESSMENT ORDERS OF THE PRECEDIN G YEARS AS PER LAW. THUS, THE DIRECTION IS ONLY TO ACT AS PER LAW WHICH INCLUDES VERIFICATION OF FACTS AND LAW. THEREFORE, WE DO NOT SEE ANY PREJUDICE CAUSED TO THE REVENUE. THEREFORE, THI S GROUND OF APPEAL IS ALSO REJECTED. ITA NO 9 OF 2015 AP STATE HOUSING CORPORATION LTD H YDERABAD PAGE 5 OF 5 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2016. S D/ - S D/ - (J.SUDHAKAR REDDY) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 17 TH JUNE, 2016. VNODAN/SPS COPY TO: 1. DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS), HYDERA BAD CIRCLE, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 04 2. A.P. STATE HOUSING CORPORATION LTD 3-6-184 URDU GAL I, HIMAYAT NAGAR, HYDERABAD 3. CIT(A) - IV HYDERABAD 4. DIT-III HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER