Kapil Foods and Structures Private Limited, rep. by its Executive Director Mr. A. Sanjeeva and Kausalya Management Services and Structures Private Limited, rep. by its Executive Director Mr. K. Praveen Kumar and Kausalya Agro Farms and Developers Private Limited, rep. by its Executive Director Mr. C. Vilay Kumar and Indur Avenues and Foods Private Limited, rep. by its Executive Director Mr. G. Srinivas and Nalgonda Realtors Private Limited, rep. by its Executive Director Mr. Kumara Swamy V. Deputy Commissioner of Income Tax, Central Circle 2(3), Aayakar Bhavan, Basheerbagh, Hyderabad-500 004, Telangana

ITTA/39/2023

AI Insights

The case involves multiple appeals by different companies against the orders of the Income Tax Appellate Tribunal, Hyderabad, concerning the assessment year 2018-19. The appeals were primarily focused on the disallowance of interest expenditure and the validity of reassessment proceedings initiated under Section 147 of the Income Tax Act. The appellants argued that there was a full and true disclosure of all material facts necessary for assessment, and contested the Tribunal's jurisdiction in upholding the reassessment. The High Court referenced a previous decision (I.T.T.A.No.256 of 2022) which covered similar issues and set aside the Tribunal's order, directing a re-examination of the specific grounds raised by the appellants.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 810829 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 20-06-2023
• Assessment Year: misc
• Other Referred Cases: Indur Developers and Agencies Private Limited (ITA No.672 /Hyd/2020 dated 21.3.2022)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K CHOUDARY
• Assessee Lawyers: DWARAKANATH
• Keywords: Income Tax Tribunal Appeal; Interest Expenditure; Jurisdiction; Material facts; Reassessment; Revenue expenditure
• Section: 147; 36 (1) (iii); 153(A); 153 C; 260-A

Judgement Text

"[ 3311 I IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD TUESDAY THE TWENTIETH DAY OF JUNE TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI ITTA Nos: 38 39 40 41 and 42OF 2023 (lncome Tax Tribunal Appeal Under Section 260-A of the lncome Tax Act, '1961 against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad in ITA No.174lHydl2O22, lor assessment Year 2018-19 dated 18-101022 prefened against the Order of the Commissioner of lncome Tax (Appeals)-12 Hyderabad, Appeal No 1050912017-18 dated 16-02-2022, preferred against the Order of the Assistant Contmissioner of lncome Tax, Central Circle-2(3), Hyderabad PAN/GIR No AACCK26I 4F dated 18-03-2021 ) Between: M/s. Kapil Foods and Structures Private Limrted, rep. by its Executive Director' Mr.A. Sanjeeva, 2-5-760,Subedari, Hanamkonda, Warangal District. ...APPELLANT .AND Deputy Commissioner of lncome Tax, Central Circle 2(3) Aayakar Bhavan, Basheerbagh. Hyderabad-500 004, Telangana. ...RESPONDENT INCOME TAX TRIBUNAL APPEAL NO:39 OF 2023 (lncome Tax Tribunal Appeal Under section 260-4 of the lncome Tax Act, against lhe order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad in ITA No.175/Hydl2o22, for assessment Year 2018-19 dated 18-10-2022, prelerred against the Order of the Commissioner of lncome Tax (Appeals)-12 Hyderabad, Appeal No 1051212017 18. dated rc-A2-2022, preferred against the Order of the Assistant Commissioner of lncome Tax, Central Circle-2(3), Hyderabad PAN/GIR No AAECK9304L dated 08-04-2021 ) Between: M/s. Kausalya Management Services and Structures Private Limited, rep by- its Executive Director, fr4i K. Praveen Kumar, 3-1-'l88 CVRN Nagar, Karimnagar-SO5 001 , Telangana. ...APPELLANT AND Deputy Commissioner of lncome Tax, Central Circle 2(3), AayakarBhavan Basheerbagh. Hyderabad-500 004 Telangana ...RESPONDENT INCOME TAX TRIBU NAL APPEALNO: 40OF2023 ) (lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench ' A', Hyderabad in ITA No.176/Hydt2o22,'or assessment Year 2018-19, dated '18-'10-2022 preleted against the order of the commissioner of lncome Tax (Appeals)-12 Hyderabad, Appeal No 105OB:2O17'18 dated 16-02-2022, prelened against the Order of the Assistant commissioner of lncome Tax, Central circle-2(3) PAN/GlR No.AAGCS72B5L dated 29-03-2021 ) Between: M/s Kausalya Agro Farms and Deve opers. Privatg- L11rritgg, i rep by its Executive Oirector, lVtr.C. Vilay Kumar, 16-31, gth Phase, KPBH Main Road Kukkatpally' Hyderabad-500 072 ...APPELLANT AND Deputy Commissroner of lncome Tax Central Circle 2(3), Aayakar Bhavan, Basheerbagh Hyderabad-So0 004 Telangana .RESPONDENT INCOME TAX TRIBUNAL APPEAL NO:41 OF 2023 (lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench ' A', Hyderabad in ITA No.177lHydl2122, for assessment Year 2018-19, dated 18-10-2022 preferred against the Order of the Commissioner of lncome Tax (Appeals)-12 Hyderabad, Appeal No.105OBl2O17-18 daled 16-02-2022, preferred against the Order of the Assistant Commissioner of lncome Tax, Central Circle-2(3) PAN/GIR No.AABC 10260Q dated 1 6-03-2021 .) Between: M/s. lndur Avenues and Foods Private Limited,, rep. Mr.G. Srinivas, 11-1-194112, Kanteshwar Road Gan 002, Telangana. by ga its Executive Director, sthan, Nizamabad-503 ...APPELLANT AND Dep&ty Commissioner of lncome Tax, Central Circle 2(3), AayakarBhavan, Basheerbagh, Hyderabad-S00 004, Telangana ..RESPONDENT INCOME TAX TRIBUNAL APPEAL NO: 42 OF 2023 (lncome Tax Tribunal Appeal Under Section 260-4 of the Income Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench ' A ', Hyderabad in ITA No.172lHydl2122, for assessment Year 2018-19, dated 26-09-2022 prelerred against the Order of the Commissioner of lncome Tax (Appeals)-12 Hyderabad, Appeal No.1051112017-18 daled 16-02-2022, preferred against the Order of the Assistant Commissioner of lncome Tax, Central Circle-2(3) PAN/GlR No.AACCN626 1 H dated 06-04-2021 .) Between: M/s. Nalgonda Realtors Private Limited, rep. Kumara Swamy, 1-56126 & 27 Plot No. 2 Secunderabad-500009, Telangana by its Executive Director, Mr M. 5 to 28 LG. Statue, Old Alwal, ...APPELLANT AND Deputy Commissioner of income Tax, Central Circle 2 (3), Aayakar Bh?111---.- Baihe'erbagh, Hyderabad-500 004. '..RESPONDENT Counsel for the Appellants in ITTAs: Mr. DWARAKANTH, Senior Advocate for Mr. K. SUDHAKAR REDDY Counsel forthe Respondent: M/s K. MAMATA CHOUDARY The Court made the following: COMMON JUDGMENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHIIYAN AND THE HON'BLE SRI JUSTICE N. TUKARAMJI I.T.T.A. Nos.38. 39.40, 41 and 42 of 2023 COMMON JUDGMENT: (Per the Hon'ble the Chief Juslice Ujjal Bhuyan) Heard Mr. Dwarakan ath, learned Senior Counsel for the appellants and Ms. K.Mamata Choudary, learned Senior Standing Counsel, Income Tax Department for the respondent 2. It is submitted that issue raised in this batch of appeals is covered by the decision of this Court dated O2.O2.2O23 passed in I.T.T.A.No.256 of 2022 and others Relevant portion of the order dated O2.O2.2O23 reads as follows: \"3. A11 the related appeals have been frled under Section 26OA of the Income Tax Act, 1961 (briefly referred to hereinafter as \"the Act) assailing the common order dated 21.03.2022 passed by the Income Tax Appellate Tribunal, aHyderabad Bench 'A', Hyderabad (briefly referred to hereinafter as \"lribuna.lJ disposing of the following appeals corresponding to the relevant assessment years: :l- 2 Kapil Propertv Developers Lirnrtecl, Ilanu makonda. 3. Ka1;il Foods ancl S lructures Privatc Limitr:d, Warangal. 6sa lHydl2o2o 4 Nalgonda Realtors Pliva e Limited. Securiderabad. 5. Ll3u,ala Publication s atrd t)cvelopers Pvt. l-ld , Warangal 6. N{/s. Indur Avenu('s and I oods Privatc 667 /Hyd,/2o2o HCJ & NTRJ LT.T.A.Nos.38, 39, 40, 41 &42 of 202:) Asst. Year 20t2- t3 655 H d 2020 669 H 2020 691/Hydl2o2o 670 H 2Q20 671 672 673 674 H H H H d 2020 2020 d 2020 d 2020 675 676 H H d 2020 2020 20t7-18 2 sl. t-rmit nt 1 t)a kshin Infrar.tructures Privat( ,rcl. Hvderabarl Li m itr'd Nizam;rbarl 7. M/ s.Kausalya Manargement Sr:rviccr; and -s tructures Privzil c Lrmit('d, Karimnagar . 8. Inc ur Developers and A gencies Prrvate Lirn itld, Vija,varvada. 9. Kar tsi{y61 4g1 ,, Farrnr; & Develcrpers P, ivalrr Limiled Hr,der abad. I 0. Kr usall.a Shcltt'r s Pr ival r: t,imited. Karirr nagar. 1l. M /s. Kausalva Averr t cs Private Limit( d, Karlmnagar 12. l(ir prl InIra Alerl es Privatc Limitr d Vi a arr,arlit 13. Pr,:ethi Foocls arrrl Vrllas l)rivate Li:.nitt'c1. KIra m lnam. ITA No. 6sr lHyd /2o2O 6s2lHydl2o2o 20t3 14 2012-13 6s3 /Hvd I 2O2O 2013-14 656 lHvd l2O2O 20t2 13 20 t3- 14 2017 - A 657 lHvd/2O2O 658 /Hvd/2O2O 2012- 13 659 / Hyd /2024 2013-t4 666 / Hyd l2O2o 2012-13 2Q13- t4 668 H 2020 2012- 13 2013 t4 2017 - ta 2012- t3 2013- t4 2016- t7 2012-13 2013 t4 2014- t5 2017 - A 674/Hvd,/2O2O 2013-14 2014-1,5 679 /Hyd/2o2o 680/Hvd/2o2o 2017 - 14 2012- 13 2013- 14 681 / Hvd /2O2O 682 /Hyd /2O2O 643 /Hvd /2O2O 2016 17 2017 - 18 201a- 19 684 /Hvd I 2o2O 685 / Hyd /2o2o 686 / Hyd,l 2o2o 687 /Hyd/2o2O 2012- r3 2013-14 2012-13 688 / Hyd l2o2O 689/Hyd/2O2O 2013- 4 690 / Hyd, /2o2O HC] & NTRJ I.T.T.A.N2q.38, 39, 40, 41 & 42 of 2023 4. Learned Senior Counsel for the appellant has proposed the following questions as substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal is correct in upholding the jurisdiction of the assessing ofhcer in initiating reassessment under Section 147 of the Act overlooking the contention of the appellant that the first proviso to Section 147 of the Act is not applicable since there is full and true disclosure of all material facts necessarv for assessment? Whether the Tribunal misdirected itself in dealing with a contention based on Section 153-A read with Section 153-C of the Act as if the reassessment is challenged based on the material recovered at the time of search of a group concern? 3. Whether the Tribunal failed to appreciate that the reasoning given in appeal of Indur Developets aad Agencles Ptivate Limited (ITA No.672 /Hyd l2O2O dated 21.3.2022) formed the basis for decision in this appeal and hence, it cannot be construed as a concession by a group entity? Whether the Tribunal was justified in remalding the matter for de nouo examination to verify whether the borrowings and advarces made by the appellant contain interest stipulation or not when it is clearly admitted by the appellant in the assessment proceedings that borrowings had interest stipulation while there was no such stipulation for advances given to sister concerns? 2 4 ..-. i.:-;q ,. .,..r. 4 T]CJ & NTRJ I.T.'1'.A.Nos.38, :19, 40, 4 I &j 42 of 2023 5. Wlrether thc remar(1 dircction of the Tribunal is wholly ur necessarl when, lirr the purpose of Section 37 of the Ac1, the interesl on borrowings is a revenue exocnditurr: an(l is admissible for deduction irrcspectivc of thc lir( t ivhether the advances made out oI:;uch borrowings vielded interest thereon? 6. Whether rt is $rUrin the power of the Tribunal to undo thr. relief granted l) ' the CIT(A) when the Department has not chosen lo challenge the order of the CIT(A) eitlrer through a scparate appeal or through cross ob ections? 5. Upon going through the common order passed by the Tribunal ancl as agreed to by Ieaned counsel for the pal ties, the appt:ais arc taken up for final disposal at the stage o[ admission hcaring itself. 6. In one brrnch of appeals, the sole ground raised b) the asscssees lrr:lbre the Tribunal was disallowance of interesl expenditure ttnder Section 36(l)(iir) of the Act made by the assessing officer and partly alfrrmed by the hrst appellate authority. As a matter of fact, first appellate authorlty had grar-rtcd lirnited relief to the assessees. For the balance relief, appeals rvr:re filed by the assessees before the Tribunal. 7. In anothcr batch of appeals, we hnd that the ground urlled beforc the Tnbunal was validity of reopening of assessmen'. procee dings rrnder Section 147 of the Act. 27 .O3.202i' Howcver, ue find from that instearl of adjudicating the on order dated the grounds I i 5 HC] & NTRJ LT.T.A.N19.38, 39, 40, 41 & 42 of 2023 raised by the assessees before the Tribunal, Tribunal had remanded the appeals to the file of the assessing officer. In paragraph 46 of the common order, Tribunal has held that assessing officer has to examine the assessees' fund position as well as the clinching issue as to whether the corresponding borrowings claimed to have been carrying no interest involving plotted land buyers, afresh and in light of all the evidence on wholesome basis only. 9. We are afraid Tribunal was required to adjudicate on the grounds which were urged before it by the assessees/ appellants. Remanding the matter in its entirety to the assessing olficer has caused serious prejudice to the appellants in as much as even those reliefs which have been granted by the hrst appellate authority would now stand nullihed in view of the Tribunal's direction to the assessing officer to re-do the whole exercise in its entirety. 10. We may also mention tJlat no cross-appeals were filed by the revenue against the order of the first appellate authority granting substantial relief to the assessees/ appellants. I l. That being the position, we set aside the common order of the Tribunal dated 21.O3.2O22 and direct the Tribunal to hear the appeals before it on the lirnited grounds urged by the appellants, namely, disallowance of interest expenditure under Section 36(1)(iii) of the Act to the extent disallowed by the first appellate authority as well as the validity of the re-assessment proceedings. I ) I 6 I-{CJ & NTRJ I.T.T.A.Nos.3B, 39, 1O, I I & 42 o12023 are allowed. 12. Thc qucstions framed are accordingly answered in favour of thc appellants/ assessees and against the re verttre. 13. Consequently, the appeals However, t here shall be no order as to costs.\" 3. F+ ,S',1' c @ s ,5 , i "