Taj GVK Hotels & Resorts Ltd., Hyd, Hyderabad V. DCIT, Circle-2(2), Hyderabad, Hyderabad

ITA 997/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6137 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-07-2016
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Revenue expenditure

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 996/HYD/2016 ASSESSMENT YEAR: 2007-08 M/S TAJ GVK HOTELS & RESORTS LIMITED HYDERABAD. PAN AABCT2223L VS. DCIT, CIRCLE 2(2) HYDERABAD (APPELLANT) (RESPONDENT) ITA NO. 997/HYD/2016 ASSESSMENT YEAR: 2009-10 M/S TAJ GVK HOTELS & VS. ACIT, RANGE- 2 RESORTS LIMITED HYDERA BAD. HYDERABAD. PAN AABCT2223L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. SIVA KUMAR REVENUE BY : SHRI P. CHANDRA SEKHAR DATE OF HEARING : 02-02-2017 DATE OF PRONOUNCEMENT : 17-02-2017 ORDER PER P. MADHAVI DEVI, J.M.: BOTH THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF CIT(A) -2, HYDERABAD, DATED 29-03-2016 & 28-03-2016 RESPECTIVELY. THE COMMON GROUND IN BOTH OF THESE A PPEALS IS THAT THE CIT(A) HAS ERRED IN LAW IN CONFIRMING T HE ACTION OF THE A.O IN ADDING THE PROVISION FOR LEAVE ENCASH MENT BY STATING THAT THE HONBLE SUPREME COURT HAS STAYED T HE 2 ITA NOS. 996 & 997/HYD/2016 M/S TAJ GVK HOTELS & RESORTS LTD. HYDERABAD DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXCIDE INDUSTRIES LTD. AND HAS DIRECTED THE SAID CO MPANY TO PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE B OOK. 2. ON HEARING BOTH THE PARTIES, IT IS NOTICED THAT TH E COORDINATE BENCHES OF THIS TRIBUNAL AT KOLKATA IN T HE CASE OF M/S ERNST & YOUNG PVT LTD V. DEPUTY COMMISSIONER OF INCOME-TAX IN ITA NO. 1159/KOL/2014, DATED 30-04 -2014 HAS REMITTED THE MATTER TO THE FILE OF THE A.O TO A DJUDICATE AFRESH THE ISSUE IN TERMS OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF EXCIDE INDUSTRIES LTD (SUPRA). RESPECTFULLY FOLLOWING THE DECISION OF TH E COORDINATE BENCH, WE SET ASIDE THIS ISSUE TO THE FI LE OF THE A.O WITH SIMILAR DIRECTIONS. THUS, THE ASSESSE ES APPEAL FOR THE A.Y. 2007-08 IS TREATED AS ALLOWED F OR STATISTICAL PURPOSES. ASSESSMENT YEAR 2009-10 3. FOR THE A.Y 2009-10, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND WITH REGARD TO DISALLOWANCE OF TH E INTEREST ON THE LOAN TAKEN BY THE ASSESSEE FROM HDF C BANK. 4. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESSEE BORROWED A SUM OF RS. 75 CRORES FROM HDFC BANK AND THE A.O HELD THAT THE INTEREST ON SUCH LOAN HAS TO BE CAPITALIZED. ON APPEAL, CIT(A) HAS CONFIRMED THE SA ID DISALLOWANCE. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SUM OF RS. 75 CRORES BORROWED BY THE ASSESSEE FROM THE 3 ITA NOS. 996 & 997/HYD/2016 M/S TAJ GVK HOTELS & RESORTS LTD. HYDERABAD HDFC BANK HAS BEEN PARTLY USED FOR RE-PAYMENT OF A LOAN TAKEN BY THE ASSESSEE FROM THE HSBC BANK AND THAT T HE LOAN TAKEN FROM HSBC WAS ON THE REVENUE ACCOUNT AND THEREFORE, THE AMOUNT UTILIZED FOR REPAYMENT OF THE LOANS FROM HSBC BANK SHOULD BE CONSIDERED AS UTILIZATION FOR REVENUE ACCOUNT AND THE INTEREST THERE-ON SHOULD BE ALLOWED AS REVENUE EXPENDITURE. 5.1 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD MADE ALL THE ABOVE SUBMISSIONS BEFORE THE A.O AS WELL AS THE CIT(A), BUT NONE OF THE AUTHORIT IES HAVE ACTUALLY CONSIDERED OR VERIFIED THE SAID SUBMISSION S OF THE ASSESSEE. THE COPIES OF THE SUBMISSIONS MADE BEFOR E THE AUTHORITIES BELOW HAVE BEEN FILED BEFORE US. 6. THE LD. DR HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE AGREE WITH THE FINDINGS OF T HE A.O AND THE CIT(A) THAT THE LOAN TAKEN FOR CAPITAL PURP OSES IS TO BE CAPITALIZED. HOWEVER, WHEN THE ASSESSEE HAS CLEARLY STATED THAT IT HAS UTILIZED PART OF THE LOAN FOR RE PAYMENT OF A LOAN TAKEN FOR THE REVENUE PURPOSES FROM HSBC BAN K, THE INTEREST ON SUCH PORTION OF THE LOAN SHOULD BE TREATED AS REVENUE EXPENDITURE. SINCE THE ASSESSEES CONTE NTIONS HAVE NOT BEEN VERIFIED AND APPRECIATED BY THE AUTHO RITIES BELOW, WE DEEM IT FIT AND PROPER TO REMIT THIS ISSU E ALSO TO THE FILE OF THE A.O WITH A DIRECTION TO ADJUDICATE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A FAIR 4 ITA NOS. 996 & 997/HYD/2016 M/S TAJ GVK HOTELS & RESORTS LTD. HYDERABAD OPPORTUNITY OF HEARING. THE GROUND OF APPEAL NO.4 IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 8. IN THE RESULT, THE APPEALS OF ASSESSEE FOR BOTH THE A.YS 2007-08 & 2009-10 ARE TREATED AS ALLOWED FOR STATI STICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2017. SD/- SD/- (S RIFAUR RAHAMN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 17 TH FEBRUARY, 2017 KRK 1) M/S TAJ GVK HOTELS & RESORTS LTD., ROAD NO. 1, BANJARA HILLS, HYDERABAD-500 034. 2) DCIT, CIRCLE 2(2),HYDERABAD. 3) CIT(A)-2, HYDERABAD. 4) PCIT-2, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE