MODEL PRPERTIES PVT. LTD., JAIPUR V. THE ACIT-1, JAIPUR

ITA 957/JPR/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4378 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 08-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Assessee Lawyers: A B DANGYACH
• Keywords: Capital asset; Business income; Opportunity of being heard; Revenue expenditure

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NOS. 957 & 958/JP/2015 FU/KZKJ.K O'KZ@ ASSESSMENT YEARS : 2004-05 & 2005-06 MODEL PROPERTIES PVT. LTD., GOLCHA TRADE CENTRE, M.I. ROAD, JAIPUR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCM 4097 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI A.B. DANGYACH (FCA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/09/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 31/10/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE TWO SEPARATE ORDERS OF LD. CIT(A)-I, JAIPUR, BOTH DATED 14/09/2015 FOR THE A.Y. 2004-05 AND 2005-06 RESPECTIVELY. FOR THE A.Y. 2004 -05, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF FOLLOWI NG EXPENSES CLAIMED BY APPELLANT COMPANY AS REVENUE EXPENSES BE FORE LOWER AUTHORITIES: (I) INTEREST ON TERM LOAN RS. 11,58,187/- (II) OTHER INTEREST RS. 12,99,474/- ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 2 (III) LOAN PROCESSING FEE RS. 8,700/- (IV) BANK CHARGES RS. 475 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD A.O. WAS NOT JUSTIFIED IN DISALLOWING THE ABOVE EXPENSES AS REVE NUE EXPENSES. THE ABOVE EXPENSES SHOULD HAVE BEEN ALLOWED AS LOSS AND SHOULD HAVE BEEN ALLOWED TO CARRIED FORWARD FOR SET OFF AGAINST THE INCOME OF SUCCEEDING ASSESSMENT YEAR OF APPELLANT COMPANY. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS GROSSLY ERRED IN TREATING THE LAND AS CAPITAL ASSET AND CAPITALIZING THE INTEREST ON THE LOAN, PROCESSING FEE AND BANK CHARG ES ETC. INCURRED FOR PURCHASE OF LAND WHICH HAS BEEN SHOWN AS STOCK IN TRADE OF APPELLANT COMPANY. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) WAS NOT JUSTIFIED IN DISALLOWING FOLLOWING LOSSES ASSESSED U/S 143(1)(A) FOR CARRIED FORWARD AND SET OFF AGAINST THE INCOME OF S UCCEEDING ASSESSMENT YEARS:- ASSESSMENT YEAR 2002-03 RS. 7,90,560/- ASSESSMENT YEAR 2003-04 RS. 19,59,896/- 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL AT OR BEFORE THE HEARIN G. 2. THE ASSESSEE IS A COMPANY AND DEALING IN IMMOVABL E PROPERTIES. THE ASSESSEE PURCHASED LAND FROM JDA DURING THE FINA NCIAL YEAR 2001-02 FOR A CONSIDERATION OF RS. 2,95,65,124/-. THE ASSESS EE TOOK LOAN FOR PURCHASE OF THE SAID LAND. THE ASSESSEE FILED ITS RE TURN OF INCOME FOR THE A.Y. 2004-05 ON 01/11/2004. DURING THE SCRUTINY ASS ESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIM ED RS. 22,66,836/- AS FINANCIAL EXPENSES ON ACCOUNT OF INTEREST ON TERM L OAN FOR PURCHASE OF LAND. THE ASSESSING OFFICER DISALLOWED THE SAID CLAIM OF EXPENSES BY ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 3 TREATING THE SAME AS CAPITAL IN NATURE AND ADDED TH E SAME TO THE INCOME OF THE ASSESSEE. THE MATTER WAS CARRIED TO THIS TRIBUN AL FOR BOTH THE ASSESSMENT YEARS I.E. 2004-05 AND 2005-06 WHEREIN TH E ASSESSEE HAS RAISED AN ADDITIONAL GROUND REGARDING TREATING THE LOSS DECLARED BY THE ASSESSEE AS CAPITAL LOSS ARISING FROM SALE OF LAND WHEREAS THE LAND WAS SHOWN AS STOCK IN TRADE BY THE ASSESSEE. THE TRIBUNAL AFTER CONSIDERING THE ARGUMENTS VIDE ORDER DATED 04/6/2010 HELD IN PA RA 5 TO 7 AS UNDER: 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT MATTER NEEDS REV ERIFICATIONS. IT IS SEEN THAT LAND IN QUESTION WAS SHOWN AS STOCKING TRADE I N PAST ACCORDINGLY THE SALE PROCEEDS WERE TREATED AS BUSINESS RECEIPTS BY THE ASSESSEE. HOWEVER, THE A.O. REJECTED THE CLAIM OF THE ASSESSEE BY OBSE RVING THAT ASSESSEE WAS REQUIRED TO FILE THE DETAILS IN SUPPORT OF THE CLAI M HOWEVER ASSESSEE FAILED TO FILE SUCH DETAILS. THE FINDINGS HAVE BEEN RECORD ED IN LAST BUT ONE PARA AT PAGE 2 OF HIS ORDER. 6. COUNSEL OF THE ASSESSEE HAS STATED THAT ALL THE DETAILS WERE ALREADY ON RECORD OF EARLIER YEARS AS WELL AS CURRENT YEAR. TH IS FACT NEEDS VERIFICATION. 7. IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND TO MEET THE END OF JUSTICE AND ALSO TO CONSIDER THE LEGAL GROUND, WE RESTORE T HE ISSUE TO THE FILE OF THE A.O.. THE A.O. IS DIRECTED TO PASS AFRESH ORDER AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THEREFORE, THE MATTER WAS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER WITH DIRECTION TO PASS A FRESH ORDER AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE ORDER PASSED PURSUA NT TO THE DIRECTIONS OF ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 4 THE TRIBUNAL, THE A.O. HAS REPEATED THE FINDING AS T HE TRANSACTION AND ACTIVITY OF THE ASSESSEE WAS ONLY DEALING IN PURCHAS E AND SALE OF CAPITAL ASSET AND THE OUTCOME OF THE TRANSACTION WAS TREATED AS CAPITAL GAIN/LOSS. THUS, THE ASSESSING OFFICER DISALLOWED THE EXPENDITUR E OF RS. 24,66,836/- BEING INTEREST ON TERM LOAN AND CONSEQUENTLY THE TO TAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 6,76,830/-. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND CLAIMED THAT THE INTEREST EXPENDI TURE IS AN ALLOWABLE CLAIM U/S 36(1)(III) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS STATED THA T THE ASSESSEE HAS NOT FURNISHED ANY FURTHER EVIDENCE AFTER THE MATTER WAS SET ASIDE BY THE TRIBUNAL AND THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT WAS NOT FOUND TO BE DISTURBE D. THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT THERE WAS NO BUSINESS AND TRADING ACTIVITY DURING THE YEARS U NDER CONSIDERATION AS WELL AS FOR THE ASSESSMENT YEAR 2002-03 AND 2003-04 AND THE ASSESSEE HAS SHOWN ONLY INCOME AS RENTAL INCOME FROM THE PRO PERTIES TAKEN BY IT ON LEASE FROM ITS GROUP CONCERN. THEREFORE, THE FINA NCIAL CHARGES CLAIMED AS DEDUCTION AGAINST THE LEASE RENTAL INCOME IS NOT PERMISSIBLE IN VIEW OF THE LD. CIT(A). ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 5 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAS ACCEP TED THE FACT THAT THE LAND IN QUESTION WAS SHOWN BY THE ASSESSEE AS STOCK I N TRADE RIGHT FROM THE ASSESSMENT YEAR 2001-02 ONWARDS AND THEREFORE, T HE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE FOR PURCHASE O F LAND IS AN ALLOWABLE DEDUCTION WHICH WAS DEBITED BY THE ASSESSEE IN THE P& L ACCOUNT UNDER THE HEAD FINANCIAL EXPENSES AND CLAIMED AS REVENU E EXPENSES. HENCE, THE LD AR HAS SUBMITTED THAT WHATEVER EXPENDITURE IN CURRED IN PURCHASE OF STOCK IN TRADE BE ALLOWED AS REVENUE EXPENDITURE. THE LD AR HAS RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. VIJAY SOLVEX LTD. 274 CTR 384. HE HAS RELIED UPON THE FOLLOWING DECISIONS: (I) K. SAMPATH KUMAR VS CIT 158 ITR 0025 (MAD) (II) ORIENT COSMETICS LTD. VS DCIT 69 TTJ 0490 (ITAT MADRAS) 5. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THERE IS NO BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE DURIN G ALL THESE YEARS AND THEREFORE, ONCE THE FACTUM OF NO BUSINESS ACTIVITY OF PURCHASE AND SALE OF LAND IS NOT IN DISPUTE THEN MERE ENTRIES IN THE BOO KS WILL NOT DECIDE THE NATURE OF TRANSACTION. HE HAS REFERRED TO THE FINDI NG OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS SHOWN ONLY LEASE RENTAL INCOME FOR ALL THESE YEARS A GAINST WHICH THE ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 6 FINANCIAL CHARGES HAS BEEN CLAIMED AS DEDUCTION. ON CE IT IS NOT IN DISPUTE THAT THE FINANCIAL CHARGES CLAIMED BY THE ASSESSEE ARE NOT INCURRED FOR EARNING THE LEASE RENTAL INCOME THEN THE SAME CANNO T BE ALLOWED AS THE SAID EXPENDITURE WAS NOT INCURRED FOR EARNING THE SA ID INCOME. THE CLAIM OF THE ASSESSEE WAS NOT FOUND TO BE CORRECT AS TO ES TABLISH THE ACTIVITY AS BUSINESS, THE ASSESSEE HAS TO SHOW THE CONTINUITY OF THE ACTIVITY AND THE SAME IS DONE IN AN ORGANIZED MANNER. THERE SHOULD BE REPEATED PURCHASE AND SALE AND IN THE BUSINESS OF MULTIPLICITY OF THE TRANSACTION A SOLITARY TRANSACTION OF PURCHASE OF LAND CANNOT BE TREATED A S BUSINESS ACTIVITY. IN SUPPORT OF THIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SUTLEJ COTTON MILLS VS CIT 116 ITR 1 THAT THE ENTRIES MADE IN THE BOOKS OF ACCOUNT IS NOT DETERMI NATIVE OF THE QUESTION WHETHER THE ASSESSEE HAS EARNED ANY PROFIT OR SUFFER ED ANY LOSS. WHAT IS NECESSARY TO BE CONSIDERED IS TRUE NATURE OF TRANSA CTION AND WHETHER IN FACT IT HAS RESULTED IN PROFIT OR LOSS TO THE ASSES SEE. THE LD DR HAS RELIED UPON THE ORDER OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. IT IS CLEAR FROM THE EARLIER OR DER OF THIS TRIBUNAL DATED 04/06/2010 THAT THE ASSESSING OFFICER WAS DIRECTED T O VERIFY THE FACT WHETHER THE LAND IN QUESTION WAS SHOWN AS STOCK IN TR ADE IN PAST AND CONSEQUENTLY THE SALE PROCEEDS TO BE TREATED AS BUS INESS RECEIPT. THE ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 7 SCOPE OF ENQUIRY IN THE REMAND PROCEEDINGS WAS ONLY TO ASCERTAIN WHETHER THE LAND IN QUESTION WAS SHOWN BY THE ASSESSEE AS ST OCK IN TRADE AND THEREFORE, ANY INCOME OR EXPENDITURE INCURRED IN RE SPECT OF THE STOCK IN TRADE WOULD BE REVENUE IN NATURE. THE ASSESSING OFFI CER IN THE ORDER PASSED PURSUANT TO THE REMAND ORDER OF THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: FROM THE ABOVE SUBMISSION OF THE ASSESSEE, IT WAS CLEAR THAT IT HAD DONE SOME OPERATION FOR DOING THE BUSINESS OF SO CALLED SALE OF THE PLOTS/RESIDENTIAL HOUSES/COMMERCIAL COMPLEXES. BUT FOR DOING THE BUSI NESS AS CLAIMED HAS ONE AND ONLY ONE THAT THE ACTIVITY FOR THE BOOKING OF T HE UNITS FOR SALE, FOR WHICH NO ACTIVITY HAS BEEN DONE OR ANY CONCRETE STEPS TAKEN FOR THE SAME. THUS THE CLAIM OF THE ASSESSEE THAT BY MAKING THE E XPENSES OF RS. 5,13,843/- HE HAS QUALIFIED FOR DOING THE ACTIVITY OF BUSINESS IS WRONG AND THE A.O. WAS RIGHT, IN TREATING THE SO CALLED ASSET CLAIMED AS STOCK IN TR ADE, AS CAPITAL ASSET. PENALTY PROCEEDINGS ARE ALSO BEING INITIATED FOR THE FURNIS HING OF THE WRONG FACTS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS ACCEPTED THAT THE ASSESSEE HAS DONE SOME OPERATION FOR DOING BUSINESS OF SO CALLED SALE OF P LOTS/RESIDENTIAL HOUSES/COMMERCIAL COMPLEXES. HOWEVER, THE ASSESSING OFFICER DENIED THE CLAIM ON THE GROUND THAT THE ASSESSEE HAS DONE ONLY ONE ACTIVITY I.E. TAKING OF UNITS FOR SALE FOR WHICH NO ACTIVITY HAS B EEN DONE OR ANY CONCRETE STEPS TAKEN FOR THE SAME. DURING THE APPELLATE PROC EEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE HAS REITERATED ITS CLAIM WHICH WA S ALSO REFERRED TO THE ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 8 ASSESSING OFFICER FOR FILING THE REMAND REPORT EVEN IN THE REMAND REPORT, THE ASSESSING OFFICER HAS NOT DISPUTED THE FACT THA T FOR THE EARLIER YEARS I.E. THE A.Y. 2002-03 ONWARDS, THE ASSESSEE HAS SHOWN THE LAND IN QUESTION AS STOCK IN TRADE, HOWEVER, SINCE THE RETUR NS WERE PROCESSED U/S 143(1), THEREFORE, THE ASSESSING OFFICER DID NOT AC CEPT THE CLAIM FOR THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) HAS NOT DISP UTED THE FACT THAT THE ASSESSEE HAS SHOWN THE PROPERTY UNDER CONSIDERATION AS STOCK IN TRADE AS REFERRED IN PARA 3.1.2 (VII) PAGE 17 AND 18 AS UNDE R: 3.1.2(VII) THE ASSESSEE HAS SHOWN THE PROPERTY UND ER CONSIDERATION AS STOCK IN TRADE, HOWEVER, IT COULD BE SEEN FROM THE ABOVE DISCUSSION THAT IT HAD NOT UNDERTAKEN ANY ACTIVITY WHICH COULD LEAD TO THE INFERENCE THAT ASSESSEE WAS TRADING IN IMMOVABLE PROPERTIES. IT IS A WELL ESTABLISHED FACT THAT SUBS TANCE TAKES OVER THE FORM, THEREFORE, IT DOES NOT MATTER WHETHER THE ASSESSEE HAD SHOWN THE INVESTMENT IN PROPERTIES AS STOCK IN TRAD E IN ITS BOOKS OF ACCOUNTS AND FINANCIAL STATEMENTS. THE FACT OF SHOWING THIS LAND IN THE BOOKS OF ACCOUNT AS STOCK IN TRADE IS NOT IN DISPUTE, HOWEVER, THE LD. CIT(A) HAS DENIED TH E CLAIM ON THE GROUND THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY ACTIVITY WH ICH COULD LEAD TO THE INFERENCE THAT THE ASSESSEE WAS TRADING IN IMMOVABLE PROPERTIES. THOUGH, THERE WAS NO SALE BY THE ASSESSEE FOR ALL THESE YEAR S, THEREFORE, THE TRANSACTION IN QUESTION IS ONLY THE PURCHASE OF LAN D HOWEVER, TO DETERMINE WHETHER THIS IS STOCK IN TRADE OR CAPITAL ASSET, THE INTENTION OF THE PARTY ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 9 HAS TO BE TAKEN INTO CONSIDERATION. THE ASSESSEE HAS UNDISPUTEDLY RIGHT FROM THE YEAR IN WHICH THE LAND IN QUESTION WAS ACQU IRED SHOWN IT AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT FROM YEAR AFTER YE AR AND THEREFORE, IT IS NOT A CASE OF CLAIMING THE LAND IN QUESTION AS STOC K IN TRADE ONLY FOR THE YEAR UNDER CONSIDERATION. THE REVENUE HAS NOT DISPUT ED THAT FOR THE A.Y. 2002-03 AND 2003-04, THE ASSESSEES CLAIM WAS ACCEPT ED U/S 143(1) OF THE ACT AND THEREFORE, IF NON-SCRUTINY OF THE RETUR N OF INCOME CANNOT BE TAKEN AGAINST THE ASSESSEE ONCE THE FACT OF SHOWING THE LAND IN QUESTION AS STOCK IN TRADE IS NOT IN DISPUTE. ACCORDINGLY, E VEN IF THERE IS NO SALE TRANSACTION AFTER PURCHASING OF LAND IN QUESTION, B UT WHEN THE LANDS IN QUESTION IS SHOWN AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT THEN WHENEVER THE ASSESSEE SALES THE LAND OR ANY PART OF THE LAND IN QUESTION, THE SAME WILL BE BUSINESS INCOME OF THE ASSESSEE AND THE EXPE NDITURE WHICH IS INCURRED FOR TAKING LOAN FOR PURCHASE OF LAND IN QU ESTION CANNOT BE DISALLOWED ON THE GROUND THAT AFTER PURCHASING THE L AND, THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY. HENCE, IN VI EW OF THE UNDISPUTED FACT THAT THE ASSESSEE HAS RIGHT FROM THE YEAR IN WHICH T HE LAND IN QUESTION WAS PURCHASED TREATED THE SAME AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT THEN THE ASSESSING OFFICER CANNOT SUBSTITUTE THE BU SINESS DECISION OF THE ASSESSEE MERELY BECAUSE THERE WAS NO SUBSEQUENT ACTI VITY OF SALE OF LAND. ACCORDINGLY, THE CLAIM OF THE ASSESSEE IS AN ALLOWAB LE REVENUE EXPENDITURE ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 10 AND IN ABSENCE OF ANY BUSINESS INCOME, THE SAME WOUL D BE ALLOWED AS CARRY FORWARD OF THE LOSSES FOR THE A.Y. 2004-05. 7. THE APPEAL FOR THE A.Y. 2005-06, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF FOLLOWI NG EXPENSES MADE BY A.O. WHICH WERE RIGHTLY CLAIMED BY APPELLANT COM PANY AS REVENUE EXPENSES: (I) INTEREST PAID TO THE BANK RS. 5,29,936/- (II) OTHER INTEREST RS. 11,38,908/- (III) PRE PAYMENT CHARGES OF FEE RS. 1,44,550/- (IV) BANK CHARGES RS. 252/- RS. 18,13,646/- 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD A.O. WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF ASSESSING OFFI CER AND ASSESSING INCOME TO THE EXTENT OF RS. 6,35,885/- AGAINST THE LOSS RETURNED AT RS. 11,45,482/- BY THE APPELLANT COMPANY. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE L D. CIT(A) WAS NOT JUSTIFIED IN NOT ALLOWING ABOVE EXPENSES (LOSS) WHI CH SHOULD HAVE BEEN ALLOWED AND SHOULD BE CARRIED FORWARD FOR SET OFF AGAINST THE INCOME OF THE SUCCEEDING ASSESSMENT YEAR. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD. LOWER AUTHORITIES WERE NOT JUSTIFIED IN DISALLOWING FOLLO WING EXPENSES AND TREATING LAND AS CAPITAL ASSETS AND CAPITALIZING TH E FOLLOWING EXPENSES IN HANDS OF APPELLANT COMPANY:- (I) INTEREST PAID TO THE BANK RS. 5,29,936/- (II) OTHER INTEREST RS. 11,38,908/- (III) PRE PAYMENT CHARGES OF FEE RS. 1,44,550/- ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 11 (IV) BANK CHARGES RS. 252/- RS. 18,13,646/- 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL AT OR BEFORE THE HEARIN G. 8. THE ISSUES RAISED BY THE ASSESSEE FOR THE A.Y. 20 05-06 ARE COMMON TO THE ISSUE RAISED IN THE APPEAL FOR A.Y. 2004-05, ACCORDINGLY IN VIEW OF OUR FINDING ON THESE ISSUES THAT THE EXPENDITURE IN CURRED BY THE ASSESSEE ON ACCOUNT OF FINANCIAL CHARGES ARE AN ALLOWABLE BUS INESS EXPENDITURE AND CONSEQUENTLY THE LOSSES BROUGHT FORWARD FROM THE ASS ESSMENT YEAR 2005- 06 WOULD BE SET OFF AGAINST THE INCOME IF ANY FOR TH E A.Y. 2005-06. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF CARRY FORWARD OF LOSS FOR SETTING OFF AGAINST THE INCOME OF THE SUCCEEDING YE AR. HENCE, IN THIS YEAR ALSO, WE SET ASIDE THE ORDER OF THE LD. CIT(A). 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 ST OCTOBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- MODEL PROPERTIES PVT. LTD., JAIPUR. ITA 957 & 958/JP/2015_ MODEL PROPERTIES VS. ACIT 12 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 957 & 958/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR