ACIT vs Lodhi Property Company Ltd., New… | ITAT Delhi 2022

Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI

ORDER PER ANADEE NATH MISSHRA, AM: (A) This appeal by Revenue is filed against the order of Learned Commissioner of Income Tax (Appeals)-44, New Delhi [“Ld. CIT(A)”, for short], dated 29.03.2019 for Assessment Year 2012-13.

ACIT vs. M/s Lodhi Property Company (A.1) In this appeal before us, filed by Revenue, the grounds of appeal originally filed on 06/06/2019 along with Form No. 36, were later substituted by Revenue, by filing revised grounds of appeal. A revised Form-36 dated 20/07/2022 was also filed along with the aforesaid revised grounds of appeal. The revised grounds of appeal, as aforesaid, are as under:

“1. That the order of the Ld. CIT(A) is erroneous & contrary to facts & law.

Whether on the facts and circumstances of the case and in law, the CIT(A) is justified in deleting the disallowance of interest of Rs.7,88,88,162/- u/s 36(1)(iii) paid on borrowed fund as the money has been diverted to sister concerns without commercial expediency.

3. That the appellant craves leave to add after or amend any ground(s) of the appeal raised above at the time of hearing.” (B) On perusal of the aforesaid revised grounds of appeal, the only issue in dispute is regarding the addition made by the Assessing Officer by way of disallowance of interest u/s 36(1)(iii) amounting to Rs.7,88,88,162/-. The aforesaid disallowance was made by the Assessing Officer in assessment order dated 20/05/2016. However, the Ld. CIT(A), vide impugned appellate order dated 29/03/2019, deleted the aforesaid addition of Rs.7,88,88,162/-. This appeal before us is filed by Revenue against the aforesaid impugned appellate order dated 29/03/2019 of Ld. CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short), written submissions were made from the assessee’s side, relevant portion of which is reproduced as under:

ACIT vs. M/s Lodhi Property Company “1. The appeal filed by the assessing officer is against the order passed by CIT(A)-44, New Delhi dated 29/03/2019.

2. The issue arising from the order of CIT(A) is regarding deletion of disallowance of interest amounting to Rs. 7,88,88,162/- u/s 36(1)(iii) of the Income Tax Act, 1961.

The assessing officer considered the disallowance on similar basis as in the preceding years on the ground that interest bearing funds have been invested in sister concerns. The CIT(A) deleted the disallowance by following the order of Hon’ble ITAT in immediately preceding AY 2011-12 in assessee’s own case wherein on identical facts, it was held that the investment in subsidiary/sister concerns is one of the main objects of the assessee company and the investments so made are for business purposes and thus satisfying the requirement of commercial expediency. The finding of CIT(A) is at Page 20-22 Para 5.2, 5.3 and 5.4 of the impugned order. The concluding para is reproduced hereunder:

5.4 The material facts of the case are the same in the instant year also. In accordance with the principle of consistency, the doctrine of judicial discipline and respectfully following the order of the Hon’ble ITAT in Del/16 for AY 2011-12 dated 28.02.2019, the addition made by the AO on account of proportionate interest cost on borrowings under section 36(l)(iii) of the Act is deleted.

In this connection, it is submitted that the issue of disallowance u/s 36(l)(iii) is a recurring issue in assessee’s case and has been consistently decided in favour of the assessee in the earlier assessment years. The details of judicial precedents are as under:

Assessment ITAT High Court Supreme Court Year Order of Hon’ble ITAT SLP filed by the was affirmed by revenue Disallowance deleted Hon’ble Delhi High dismissed by vide order dated Court vide dated Hon’ble Apex 09/04/2018 in ITA 2010-11 28/09/2018 in Court vide order No. 1750/Del/2015 Income Tax Appeal dated Page 4-7 No. 1012/2018 23/08/2019 in Para 6 - 6.3 Page 4-6 SLP(Civil) Diary Para 6-7 No. 22016/2019 Hon’ble ITAT vide order dated Appeal of the revenue SLP filed by the 28/02/2019 in ITA was dismissed by revenue No. 1425/Del/16 Hon’ble High Court dismissed by deleted the vide order dated Hon’ble Apex 2011-12 disallowance after 21/08/2019 in ITA Court vide order following the order of 777/2019. dated Delhi High Court for The Hon’ble High 28/10/2021 in AY 2010-11. Court followed the SLP(Civil) Diary Page 3-7 order for AY 2010-11 No. 8033 of 2020 Para 9 - 1 4 ACIT vs. M/s Lodhi Property Company 5. In the light of the orders of Hon’ble ITAT in immediately preceding AY 2010-11 and 2011-12 which have been confirmed by Hon’ble Delhi High Court and Supreme Court, the issue under consideration is fully and squarely covered and as such the order of CIT(A) deleting the disallowance may kindly be upheld.

(B.1) At the time of hearing before us, the Ld. Authorized Representative (“Ld. AR” for short) for assessee referred to the aforesaid written submissions; and once again submitted that issue in dispute regarding the aforesaid addition is squarely covered by order of Co-ordinate Bench of Income Tax Appellate Tribunal, Delhi dated 09/04/2018 for Assessment Year 2010-11 in asssessee’s own case in which was affirmed by Hon’ble Delhi High Court vide order dated 28/09/2018 in Income Tax Appeal No.1012/2018 and; also vide order dated 28/02/2019 for Assessment Year 2010-11 of Co-ordinate Bench of Income Tax Appellate Tribunal, Delhi in assessee’s own case in ITA No.1425/Del/2016 which was affirmed by Hon’ble Delhi High Court, vide order dated 21/08/2019 in ITA No.777/2019. The Ld. AR for the assessee further submitted that Special Leave Petitions (SLPs) filed by Revenue against the aforesaid orders dated 28/09/2018 and 21/08/2019 of Hon’ble Delhi High Court have already been dismissed by Hon’ble Supreme Court, vide order dated 23/08/2019 in SLP (Civil) Diary No.22016/2019 and vide order dated 28/10/2021 in SLP (Civil) Diary No.8033 of 2020 respectively. He furthermore submitted that the facts in the present appeal pertaining to Assessment Year 2012-13 are identical to facts in Assessment Years 2010-11 and 2011-12 to which the ACIT vs. M/s Lodhi Property Company aforesaid orders of Hon’ble Supreme Court, Hon’ble Delhi High Court and Co-ordinate Benches of Income Tax Appellate Tribunal, Delhi pertain. He submitted that the issue in dispute in the present appeal is squarely covered in favour of the assessee vide aforesaid orders of Hon’ble Supreme Court, Hon’ble Delhi High Court and Co- ordinate Benches of ITAT, Delhi; the appeal of Revenue should be dismissed.

(B.2) The Ld. CIT-DR for Revenue agreed with the submissions of the Ld. AR for assessee. She submitted that the issue in dispute in the present appeal, regarding disallowance of interest, is squarely covered by the aforesaid orders dated 09/04/2018 and 28/02/2019 of Co-ordinate Benches of ITAT, Delhi; order dated 28/09/2018 and 21/08/2019 of Hon’ble Delhi High Court. She also agreed that Revenue’s SLP, against aforesaid orders dated 28/09/2018 and 21/08/2019 of Hon’ble Delhi High Court have already been dismissed by Hon’ble Supreme Court vide aforesaid orders dated 23/08/2019 in SLP (Civil) Diary No.22016/2019 and vide order dated 28/10/2021 in SLP (Civil) Diary No.8033 of 2020 respectively.

(B.2.1) We have heard the representatives of both sides. We have perused the materials on record. Both sides are in agreement that the issue in dispute in the present appeal, regarding disallowance of interest, is squarely covered by the aforesaid orders dated 09/04/2018 and 28/02/2019 of Co-ordinate Benches of ACIT vs. M/s Lodhi Property Company ITAT, Delhi; and by aforesaid orders dated 28/09/2018 and 21/08/2019 of Hon’ble Delhi High Court. Both sides are also in agreement that SLPs, filed by Revenue against the aforesaid orders dated 28/09/2018 and 21/08/2019 of Hon’ble Delhi High Court have already been dismissed by Hon’ble Supreme Court vide order dated 23/08/2019 in SLP (Civil) Diary No.22016/2019 and vide order dated 28/10/2021 in SLP (Civil) Diary No.8033 of 2020 respectively. Neither side has been brought any distinguishing facts and circumstances or legal submissions for our consideration to persuade us to take a view different from view taken in aforesaid orders. In view of foregoing, we decline to interfere with the impugned appellate order dated 29/03/2019 of the Ld. CIT(A) and decide the issue in dispute in regarding the aforesaid amount of Rs. Rs.7,88,88,162/- in favour of the assessee. Grounds of appeal are treated as dismissed accordingly.

This order was already pronounced orally on 21st July, 2022 in Open Court, in the presence of representatives of both sides, after conclusion of the hearing. Now this order in writing is signed today on 26/07/2022.

ACIT CIRCLE-15(2), NEW DELHI vs. LODHI PROPERTY COMPANY LTD., NEW DELHI