DCIT(CC)-8(3), MUMBAI vs. LOKHANDWALA KATARIA CONSTRUCTION (PVT) LTD, MUMBAI

The captioned appeals by the Revenue for assessment year The captioned appeals by the Revenue for assessment year The captioned appeals by the Revenue for assessment years 2017-18 and 2018-19 are directed against two separate order 19 are directed against two separate order 19 are directed against two separate orders passed by the Ld. Commissioner of Income passed by the Ld. Commissioner of Income-tax (Appeals) tax (Appeals) – 50, Mumbai [in short ‘the Ld. CIT(A)’], whereas, the cross-objection has Mumbai [in short ‘the Ld. CIT(A)’], whereas, the cross Mumbai [in short ‘the Ld. CIT(A)’], whereas, the cross been filed by the assessee been filed by the assessee for assessment year 2018- -19.

3. Firstly, we take up the appeal of the Revenue for assessment we take up the appeal of the Revenue for assessment we take up the appeal of the Revenue for assessment year 2017-18. The sole ground sole ground raised by the Revenue raised by the Revenue is reproduced as under:

Whether on the facts and in the circumstances of the case and in Whether on the facts and in the circumstances of the case and in Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the disallowance of Interes law, the Id. CIT(A) erred in deleting the disallowance of Interes law, the Id. CIT(A) erred in deleting the disallowance of Interest u/s 36(1)(iii) amounting to Rs 36(1)(iii) amounting to Rs.8,85,77,454/- without appreciating the without appreciating the facts brought out by the Assess facts brought out by the Assessing Officer that the proportionate ing Officer that the proportionate disallowance of Interest claimed as expenditure should be made to disallowance of Interest claimed as expenditure should be made to disallowance of Interest claimed as expenditure should be made to the extent of Interest free loans given to Lo the extent of Interest free loans given to Lokhandwala Infrastructure khandwala Infrastructure Pvt. Ltd. as the same is not incurred for the purpose d. as the same is not incurred for the purpose of of business? 4. Briefly stated, facts of the case are that the assessee filed facts of the case are that the assessee filed return of income on 31.10.2017 declaring loss at Rs.8,50,91,969/-. return of income on 31.10.2017 declaring loss at Rs.8,50,91,969/ return of income on 31.10.2017 declaring loss at Rs.8,50,91,969/ The return of income filed by the assessee was selected for scrutiny The return of income filed by the assessee was selected for scrutiny The return of income filed by the assessee was selected for scrutiny

M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 3 (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024 assessment and statutory notices under the Income-tax Act, 1961 assessment and statutory notices under the Income assessment and statutory notices under the Income (in short ‘the Act’) were issued and complied with. In the ‘the Act’) were issued and complied with. In the ‘the Act’) were issued and complied with. In the assessment completed u/s 143(3) of the Act completed u/s 143(3) of the Act certain additions/ certain additions/ disallowances were made. On further appeal, the Ld. CIT(A) on the disallowances were made. On further appeal, the Ld. CIT(A) on the disallowances were made. On further appeal, the Ld. CIT(A) on the issue of proportionate disallowance of the interest amounting to issue of proportionate disallowance of the interest amounting to issue of proportionate disallowance of the interest amounting to Rs.8,85,77,454/- allowed relief to the assessee. Aggrieved allowed relief to the assessee. Aggrieved allowed relief to the assessee. Aggrieved, the Revenue is in appeal before us by way of raising grounds as Revenue is in appeal before us by way of raising grounds as Revenue is in appeal before us by way of raising grounds as reproduced above.

5.1 The sole ground The sole ground of the appeal relates to disallowance of of the appeal relates to disallowance of Rs.8,85,77,454/- out of interest paid out of interest paid and debited to work in and debited to work in progress (WIP) for the reason that assessee diverted interest bearing for the reason that assessee diverted interest bearing for the reason that assessee diverted interest bearing funds towards interest free advances to sister concern. The brief funds towards interest free advances to sister concern. funds towards interest free advances to sister concern. facts qua the issue in dispute are that the assessee e in dispute are that the assessee was engaged in e in dispute are that the assessee carrying out construction of residential tower namely ‘Minerva’ carrying out construction of residential tower namely carrying out construction of residential tower namely located in Mumbai. The assessee received funding from a located in Mumbai. The assessee received funding located in Mumbai. The assessee received funding namely M/s Tricona Capital (Five) Ltd. (TC5) Tricona Capital (Five) Ltd. (TC5) investment firm namely M/s amounting to Rs.100 crore amounting to Rs.100 crores for construction of the aforesaid project s for construction of the aforesaid project in 2006. As part of the funding arrangement, in 2006. As part of the funding arrangement, an agreement was entered into between assessee and TC5 entered into between assessee and TC5 which contained conditions, which contained conditions, interalia, that approval was required to be taken that approval was required to be taken by the assessee by the assessee company from ‘TC5 TC5’ for any major business business decisions.

M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 4 (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024 Subsequently, the assessee had taken term loan from Bank of assessee had taken term loan from Bank of assessee had taken term loan from Bank of Baroda for Rs.100 crores and Allahabad Bank for Rs.50 crores in Baroda for Rs.100 crores and Allahabad Bank for Rs.50 crores in Baroda for Rs.100 crores and Allahabad Bank for Rs.50 crores in 2014. Out of the said funds, the assessee carried out construction 2014. Out of the said funds, the assessee carried out construction 2014. Out of the said funds, the assessee carried out construction completing up to 51st st floors in 2014, but there was there was some delay in getting Floor Space Index Floor Space Index (FSI) for balance floors and hence the (FSI) for balance floors and hence the construction could not on could not be continued from 2014 onwards. from 2014 onwards. The assessee submitted that i assessee submitted that in view of the financial crunch faced n view of the financial crunch faced, it could not make payment of inst could not make payment of installments for loans to the banks allments for loans to the banks which resulted into account of the assessee converted into non- which resulted into account of the assessee converted into non which resulted into account of the assessee converted into non performing assets (NPA) (NPA) by the ‘Allahabad Bank Allahabad Bank’ and ‘Bank of Baroda’ on 31.12.2015 and banks started legal action against the on 31.12.2015 and banks started legal action against the on 31.12.2015 and banks started legal action against the assessee. Under the circumstances, the assessee approached M/s assessee. Under the circumstances, the assessee approached assessee. Under the circumstances, the assessee approached India Bulls Housing Finance Ltd. India Bulls Housing Finance Ltd. to avail further loan for to avail further loan for construction of project and repay the loan construction of project and repay the loan of Bank of Baroda and of Bank of Baroda and Allahabad Bank. For this purpose, the assessee sought approval . For this purpose, the assessee sought approval . For this purpose, the assessee sought approval from TC5 but same was denied and the said company sought exit from TC5 but same was denied and the said company sought exit from TC5 but same was denied and the said company sought exit from the project. After several discussion and communication from the project. After several discussion and communication from the project. After several discussion and communication between assessee and TC5, the assessee agreed for exit of the TC5 between assessee and TC5, the assessee agreed for exit of the TC5 between assessee and TC5, the assessee agreed for exit of the TC5 as shareholder from the assessee company so that assessee could from the assessee company so that assessee could from the assessee company so that assessee could take loan and construct the pending building and substitute take loan and construct the pending building take loan and construct the pending building shareholding ng of of the the TC5 TC5 by by another another sister sister concern M/s Lokhandwala Infrastruction Pvt. Ltd. Lokhandwala Infrastruction Pvt. Ltd. During the assessment During the assessment proceedings the AO found that the proceedings the AO found that the assessee availed loan of assessee availed loan of Rs.384.83 crores for construction of its real estate project from Rs.384.83 crores for construction of its real estate project from Rs.384.83 crores for construction of its real estate project from M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 5 (Pvt) Ltd & 3878 & CO. ITA Nos. 3879 & 3878 193/MUM/2024 India Bull Housing Finance Ltd. Out of total amount, an amount of Bull Housing Finance Ltd. Out of total amount, an amount of Bull Housing Finance Ltd. Out of total amount, an amount of Rs.107.5 crore has been forwarded as interest free loan to its group been forwarded as interest free loan to its group been forwarded as interest free loan to its group concern i.e. Lokhandwala concern i.e. Lokhandwala Infrastructure Pvt. Ltd for buying shares for buying shares of the assessee from TC5 and thereby allowing the exit TC5. The of the assessee from TC5 and thereby allowing the exit TC5. The of the assessee from TC5 and thereby allowing the exit TC5. The Assessing Officer has disallowed the interest payment to India Bulls Assessing Officer has disallowed the interest payment to India Bulls Assessing Officer has disallowed the interest payment to India Bulls Housing Finance Ltd corresponding to the advance of Rs.107.5 Housing Finance Ltd corresponding to the advance of Rs.107.5 Housing Finance Ltd corresponding to the advance of Rs.107.5 crores to Lokhanwala Infr Lokhanwala Infrastructure Pvt. Ltd. as an interest free astructure Pvt. Ltd. as an interest free loan. According to the Assessing Officer, it was a diversion of the loan. According to the Assessing Officer, it was a diversion of the loan. According to the Assessing Officer, it was a diversion of the funds for non-business purposes and therefore, the interest business purposes and therefore, the interest business purposes and therefore, the interest corresponding to the advance to Lokhandwala Infrastructure Pvt. corresponding to the advance to Lokhandwala Infrastructure Pvt. corresponding to the advance to Lokhandwala Infrastructure Pvt. Ltd. was liable to be d Ltd. was liable to be disallowed invoking section 36(1)(iii) of the Act. isallowed invoking section 36(1)(iii) of the Act. But according to the Ld. CIT(A) said advance was for the purpose of But according to the Ld. CIT(A) said advance was for the purpose of But according to the Ld. CIT(A) said advance was for the purpose of the business need and survival of the company so that construction the business need and survival of the company so that construction the business need and survival of the company so that construction of the pending building could be completed. According to the Ld. of the pending building could be completed. According to the Ld. of the pending building could be completed. According to the Ld. CIT(A), the delay in getting further funds was adding to the interest , the delay in getting further funds was adding to the interest , the delay in getting further funds was adding to the interest cost of pending loans as well as legal action against the company. cost of pending loans as well as legal action against the company. cost of pending loans as well as legal action against the company. The Ld. CIT(A) also relied on the The Ld. CIT(A) also relied on the decision of the Hon’ble Supreme decision of the Hon’ble Supreme Court in the case of SA Builders 288 ITR 1 SA Builders 288 ITR 1 to support that to support that interest free loan were advanced for commercial expediency free loan were advanced for commercial expediency out of borrowed fund, then interest on borrowed fund is fund, then interest on borrowed fund is allowable expenditure. allowable expenditure.

M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 6 (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024

 Decision of Hon'ble Supreme Court in the case of S.A. Decision of Hon'ble Supreme Court in the case of S.A. Decision of Hon'ble Supreme Court in the case of S.A. Builder Ltd. v. CIT [(288 ITR 1] Builder Ltd. v. CIT [(288 ITR 1]  Decision of Hon'ble Supreme Court in the case of Hero Decision of Hon'ble Supreme Court in the case of Hero Decision of Hon'ble Supreme Court in the case of Hero Cycles Pvt. Ltd. v. CIT [379 ITR 347] Cycles Pvt. Ltd. v. CIT [379 ITR 347]  Decision of H Decision of Hon'ble Mumbai Tribunal in the case of on'ble Mumbai Tribunal in the case of Chemosyn Ltd. N. ACIT [139 ITD 68] Chemosyn Ltd. N. ACIT [139 ITD 68]  Decision of Hon'ble Bombay High Court in the case of Decision of Hon'ble Bombay High Court in the case of Decision of Hon'ble Bombay High Court in the case of CIT v. Chemosyn Ltd. CIT v. Chemosyn Ltd. [371 ITR 427] 6.1 It is an undisputed fact that the assessee obtained an interest It is an undisputed fact that the assessee obtained an interest It is an undisputed fact that the assessee obtained an interest- bearing loan of ₹384.83 cro 384.83 crores from India Bulls Housing Finance res from India Bulls Housing Finance Ltd. (hereinafter referred to as ‘India Bulls’) Ltd. (hereinafter referred to as ‘India Bulls’) for the purpose of for the purpose of construction and out of that interest free advance of Rs. 107.5 construction and out of that interest free advance of Rs. 107.5 construction and out of that interest free advance of Rs. 107.5 crores has been transferred to related concern namely M/s crores has been transferred to related concern namely M/s crores has been transferred to related concern namely M/s Lokhandwala Infrastructure Pvt Lokhandwala Infrastructure Pvt. Ltd. The section 36(1)(iii) of the Act The section 36(1)(iii) of the Act states that the amount of interest paid in respect of ‘capital states that the amount of interest paid in respect of ‘capital states that the amount of interest paid in respect of ‘capital borrowed’ for the purposes of business or profession has to be borrowed’ for the purposes of business or profession has to be borrowed’ for the purposes of business or profession has to be allowed as a deduction for computing income under section 28 of allowed as a deduction for computing income under section 28 of allowed as a deduction for computing income under section 28 of the Act. The Hon’ble Supr the Act. The Hon’ble Supreme Court in the case of SA Builders eme Court in the case of SA Builders (supra) held that the expression (supra) held that the expression- for the purpose of business for the purpose of business includes includes includes expenditure expenditure expenditure incurred incurred incurred voluntarily voluntarily voluntarily for for for ‘commercial ‘commercial ‘commercial expediency’ and it is immaterial if a third party also benefited expediency’ and it is immaterial if a third party also benefited expediency’ and it is immaterial if a third party also benefited thereby. Thus, the core issue for he core issue for adjudication in the present case adjudication in the present case before us is whether the interest is whether the interest-free loan of free loan of ₹107.5 crores advanced by the assessee advanced by the assessee—out of interest-bearing borrowings bearing borrowings—to Lokhandwala Infrastructure Pvt. Ltd. qualifies as an act of Lokhandwala Infrastructure Pvt. Ltd. qualifies as an act of Lokhandwala Infrastructure Pvt. Ltd. qualifies as an act of ‘commercial expediency.’ ‘commercial expediency.’

M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 7 (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024 6.2 Upon examining the facts, we note that Lokhandwala ining the facts, we note that Lokhandwala ining the facts, we note that Lokhandwala Infrastructure Pvt. Ltd. is a related entity of the assessee. In our Infrastructure Pvt. Ltd. is a related entity of the assessee. In our Infrastructure Pvt. Ltd. is a related entity of the assessee. In our considered view, had Lokhandwala Infrastructure Pvt. Ltd. been considered view, had Lokhandwala Infrastructure Pvt. Ltd. been considered view, had Lokhandwala Infrastructure Pvt. Ltd. been genuinely interested in acquiring a stake in the assessee, it could genuinely interested in acquiring a stake in the assessee, it could genuinely interested in acquiring a stake in the assessee, it could have directly availed an interest availed an interest-bearing loan of ₹107.5 crores from 107.5 crores from India Bulls. There appears to be no justifiable reason for the India Bulls. There appears to be no justifiable reason for the India Bulls. There appears to be no justifiable reason for the assessee to route funds to Lokhandwala Infrastructure Pvt. Ltd. in assessee to route funds to Lokhandwala Infrastructure Pvt. Ltd. in assessee to route funds to Lokhandwala Infrastructure Pvt. Ltd. in this manner. However, if Lokhandwala Infrastructure Pvt. Ltd. had this manner. However, if Lokhandwala Infrastructure Pvt. Ltd. had this manner. However, if Lokhandwala Infrastructure Pvt. Ltd. had directly availed the loan, the interest expenditure would not have tly availed the loan, the interest expenditure would not have tly availed the loan, the interest expenditure would not have been allowable as the funds were utilized for capital investment. been allowable as the funds were utilized for capital investment. been allowable as the funds were utilized for capital investment. The contention of the assessee of extending interest free loan for The contention of the assessee of extending interest free loan for The contention of the assessee of extending interest free loan for substituting TC5 by Lokhandwala Infrastructure Pvt. Ltd as a substituting TC5 by Lokhandwala Infrastructure Pvt. Ltd as a substituting TC5 by Lokhandwala Infrastructure Pvt. Ltd as a shareholder was being a being a business need, is at all not convincing. is at all not convincing. No documentary evidence has been filed indicating of insufficient funds documentary evidence has been filed indicating of insufficient funds documentary evidence has been filed indicating of insufficient funds in the hands of Lokhandwala Infrastructure Pvt. Ltd Lokhandwala Infrastructure Pvt. Ltd Lokhandwala Infrastructure Pvt. Ltd or its inability of raising interest bearing funds from banks or market. From the of raising interest bearing funds from banks or market. of raising interest bearing funds from banks or market. circumstances of the case, it is evident that the substituting of the circumstances of the case, it is evident that the substituting of the circumstances of the case, it is evident that the substituting of the shareholding of TC5 through Lokhandwala Infrastructure Pvt. Ltd. shareholding of TC5 through Lokhandwala Infrastructure Pvt. Ltd. shareholding of TC5 through Lokhandwala Infrastructure Pvt. Ltd. was a mechanism devised by the assess was a mechanism devised by the assessee to claim an interest ee to claim an interest deduction on the ₹107.5 crores loan, which otherwise would not 107.5 crores loan, which otherwise would not 107.5 crores loan, which otherwise would not have been permissible in the hands of Lokhandwala Infrastructure have been permissible in the hands of Lokhandwala Infrastructure have been permissible in the hands of Lokhandwala Infrastructure Pvt. Ltd. Furthermore, Pvt. Ltd. Furthermore, we note that the Assessing Officer has not the Assessing Officer has not disallowed the interest corresponding disallowed the interest corresponding to the borrowings utilized by to the borrowings utilized by M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 8 (Pvt) Ltd & 3878 & CO. ITA Nos. 3879 & 3878 193/MUM/2024 the assessee for its construction business the assessee for its construction business being same incurred for being same incurred for the purpose of business the purpose of business.

6.3 In our considered opinion, the extension of an interest In our considered opinion, the extension of an interest In our considered opinion, the extension of an interest-free loan to Lokhandwala Infrastructure Pvt. Ltd. lacks commercial loan to Lokhandwala Infrastructure Pvt. Ltd. lacks commercial loan to Lokhandwala Infrastructure Pvt. Ltd. lacks commercial justification. The loan has been taken from India Bulls for the The loan has been taken from India Bulls for the The loan has been taken from India Bulls for the purpose of construction activity and not for the purpose of loan to purpose of construction activity and not for the purpose of loan to purpose of construction activity and not for the purpose of loan to related concern. Moreover, the assessee has not filed any evidence Moreover, the assessee has not filed any evidence Moreover, the assessee has not filed any evidence to show that any attempt were made for substitution of to show that any attempt were made for substitution of to show that any attempt were made for substitution of shareholding of TC5 by ing of TC5 by way of an open offer to public at large rather an open offer to public at large rather than transferring the said shareholding to than transferring the said shareholding to a related entity that too related entity that too by way of providing interest free loan. by way of providing interest free loan. When the assessee is When the assessee is incurring an interest liability towards India Bulls, there is no incurring an interest liability towards India Bulls, there is no incurring an interest liability towards India Bulls, there is no rationale for not charging interest on the loan extended to a related rationale for not charging interest on the loan extended to a related rationale for not charging interest on the loan extended to a related concern. The loan from a private limited liability company to its The loan from a private limited liability company to its The loan from a private limited liability company to its share holder also deemed to be share holder also deemed to be a dividend in the hands of the dividend in the hands of the shareholder company subject to the other conditions provided shareholder company subject to the other conditions provid shareholder company subject to the other conditions provid under section 2(22)(e) of the Act. under section 2(22)(e) of the Act. The cases laws relied upon by the cases laws relied upon by the assessee are distinguishable on facts. distinguishable on facts. In the case of SA In the case of SA Builders(supra), the loan was granted to sister concern as measure Builders(supra), the loan was granted to sister concern as measure Builders(supra), the loan was granted to sister concern as measure of commercial expediency but in the case of commercial expediency but in the case no such commercial no such commercial expediency has been established. expediency has been established. In the case of Hero Cycles P Ltd In the case of Hero Cycles P Ltd (supra), loan was granted to (supra), loan was granted to subsidiary company for company for providing additional margin to meet working capital additional margin to meet working capital for meeting any cash for meeting any cash

M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 9 (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024 loses. Accordingly, we reject the assessee’s contention and set Accordingly, we reject the assessee’s contention and set Accordingly, we reject the assessee’s contention and set aside the order of the Learned CIT(A) on the aside the order of the Learned CIT(A) on the issue in dispute. The issue in dispute. The ground of appeal of the Revenue is accordingly allowed. ground of appeal of the Revenue is accordingly allowed. ground of appeal of the Revenue is accordingly allowed.

7. Now, we take up the appeal of the Revenue for assessment Now, we take up the appeal of the Revenue for assessment Now, we take up the appeal of the Revenue for assessment year 2018-19. The relevant ground is reproduced as under: he relevant ground is reproduced as under: he relevant ground is reproduced as under:

Whether on the facts and in the circumstances of the case and in Whether on the facts and in the circumstances of the case and in Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting he disallowance of Interest law, the Ld. CIT(A) erred in deleting he disallowance of Interest law, the Ld. CIT(A) erred in deleting he disallowance of Interest u/s 36(1)(üi) amounting to Rs. 6,53,00,710/ u/s 36(1)(üi) amounting to Rs. 6,53,00,710/- without appreciating without appreciating the facts brough the facts brought out by the Assessing Officer that the t out by the Assessing Officer that the proportionate disallowance of Interest claimed as expenditure proportionate disallowance of Interest claimed as expenditure proportionate disallowance of Interest claimed as expenditure should be made to the extent of Interest free loans given to should be made to the extent of Interest free loans given to should be made to the extent of Interest free loans given to Lokhandwala Infrastructure Put. Ltd. as the same is not incurred Lokhandwala Infrastructure Put. Ltd. as the same is not incurred Lokhandwala Infrastructure Put. Ltd. as the same is not incurred for the purpose for the purpose of business? 8. The ground raised being identical to the grounds raised in The ground raised being identical to the grounds raised in The ground raised being identical to the grounds raised in assessment year 2017 assessment year 2017-18 and therefore, same is decided mutatis 18 and therefore, same is decided mutatis mutandis.

1. The Ld. CIT(A) has erred in law and in facts 1. The Ld. CIT(A) has erred in law and in facts in confirming the in confirming the action of Ld. AO in reducing the proportionate expenditure of Rs. AO in reducing the proportionate expenditure of Rs. 13,77,35,740/ 13,77,35,740/- u/s 40(a) (ia) of the Act from closing WIP in the u/s 40(a) (ia) of the Act from closing WIP in the hands of the appellant which is invalid and bad in the eyes of law. hands of the appellant which is invalid and bad in the eyes of law. hands of the appellant which is invalid and bad in the eyes of law.

2. The Ld. CIT(A) has erred in law and 2. The Ld. CIT(A) has erred in law and in facts in confirming the in facts in confirming the addition made u/s 43CA of the Act of Rs. 23,55,014/ addition made u/s 43CA of the Act of Rs. 23,55,014/ addition made u/s 43CA of the Act of Rs. 23,55,014/- which is invalid and bad in the invalid and bad in the eyes of law.

M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 10 (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024

“8. Considered the submissions made by the Ld. DR and material 8. Considered the submissions made by the Ld. DR and material 8. Considered the submissions made by the Ld. DR and material placed on record, we observe from the record that t placed on record, we observe from the record that the difference he difference between stamp duty value and agreement value having a between stamp duty value and agreement value having a between stamp duty value and agreement value having a difference of 4.88% only. We further observe from the grounds of difference of 4.88% only. We further observe from the grounds of difference of 4.88% only. We further observe from the grounds of appeal raised by the assessee that assessee has made a plea appeal raised by the assessee that assessee has made a plea appeal raised by the assessee that assessee has made a plea referring to Finance Act, 2018 Finance Act, 2018, which has made an amendment in , which has made an amendment in section with effect from 01.04.2019, the value adopted or section with effect from 01.04.2019, the value adopted or section with effect from 01.04.2019, the value adopted or assessed by stamp duty authority does not exceed 105% of the assessed by stamp duty authority does not exceed 105% of the assessed by stamp duty authority does not exceed 105% of the consideration received as a result of transfer then it is deemed to consideration received as a result of transfer then it is deemed to consideration received as a result of transfer then it is deemed to be full ITA.NO. be full ITA.NO. 3148/MUM/2022 (A.Y: 2018-19) Wadhwana 19) Wadhwana Housing and Infrastructure Company value of consideration. As Housing and Infrastructure Company value of consideration. As Housing and Infrastructure Company value of consideration. As M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction

11. (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024

per the ground raised

M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction 12 (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024 to section 43CA is retrospective in nature. Accordingly, as per the to section 43CA is retrospective in nature. Accordingly, as per the to section 43CA is retrospective in nature. Accordingly, as per the proviso the pe proviso the percentage up to 5% are outside the provisions of rcentage up to 5% are outside the provisions of section 43CA section 43CA of the Act. We observe that, the stamp duty value of the Act. We observe that, the stamp duty value difference is 4.88% and the same outside the provisions of this difference is 4.88% and the same outside the provisions of this difference is 4.88% and the same outside the provisions of this section considering the fact section considering the fact the difference is less than 5%. From the difference is less than 5%. From the above discussion, we are inclined to allow the ground raised the above discussion, we are inclined to allow the ground raised the above discussion, we are inclined to allow the ground raised by the assessee. by the assessee.” 10.1 Respectfully, following the Co following the Co-ordinate Bench of the Tribunal, ordinate Bench of the Tribunal, , we restore the issue in dispute to the file of the AO for verification of we restore the issue in dispute to the file of the AO for verification of we restore the issue in dispute to the file of the AO for verification of the claim of the assessee the claim of the assessee for verification and allow in accordance for verification and allow in accordance with law. The ground is accordingly allowed for statistical purpose. . with law. The ground is accordingly allowed for statistical purpose. with law. The ground is accordingly allowed for statistical purpose.

11. The Ld. counsel for the assessee also The Ld. counsel for the assessee also filed addition filed additional grounds in the cross-objection objection, which are reproduced as under: which are reproduced as under:

1. On the facts and circumstances of the case, the Ld. CIT(A) failed On the facts and circumstances of the case, the Ld. CIT(A) failed On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that the quantum of interest u/s 36(1)(iii) of the Act of to appreciate that the quantum of interest u/s 36(1)(iii) of the Act of to appreciate that the quantum of interest u/s 36(1)(iii) of the Act of Rs. 6,53,00,710/ Rs. 6,53,00,710/-disallowed and reduced from the cost of material uced from the cost of material consumed in the assessment order is incorrect and bad in law. consumed in the assessment order is incorrect and bad in law. consumed in the assessment order is incorrect and bad in law.

2. On the facts and circumstances of the case, the Ld. CIT(A) failed 2. On the facts and circumstances of the case, the Ld. CIT(A) failed 2. On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that the Ld. AO ought to have allowed carry forward to appreciate that the Ld. AO ought to have allowed carry forward to appreciate that the Ld. AO ought to have allowed carry forward and set off of unabsorbed de and set off of unabsorbed depreciation of Rs. 2,19,59,912/ preciation of Rs. 2,19,59,912/- of earlier years against assessed income in the hands of the earlier years against assessed income in the hands of the earlier years against assessed income in the hands of the appellant.

being legal in nature and the additional ground. The grounds raised being legal in nature and the additional ground. The grounds raised being legal in nature and not requiring investigation of the fresh facts and therefore, same not requiring investigation of the fresh facts and therefore, same not requiring investigation of the fresh facts and therefore, same were admitted in view of the decision of Hon’ble Supreme Court in ted in view of the decision of Hon’ble Supreme Court in ted in view of the decision of Hon’ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 (SC) NTPC Ltd. 229 ITR 283 (SC). The ground No. 1 is The ground No. 1 is M/s Lokhandwala Kataria Construction M/s Lokhandwala Kataria Construction

13. (Pvt) Ltd & 3878 & CO. & 3878 193/MUM/2024 related to the ground raised in the appeal of the Revenue, which we related to the ground raised in the appeal of the Revenue related to the ground raised in the appeal of the Revenue have already allowed in favour o the Revenue and therefore, this have already allowed in favour o the Revenue and therefore, this have already allowed in favour o the Revenue and therefore, this additional ground of the assessee is dismissed as infructuous. The nal ground of the assessee is dismissed as infructuous. The nal ground of the assessee is dismissed as infructuous. The additional ground No. 2 relates to verification and allowing the carry additional ground No. 2 relates to verification and allowing the carry additional ground No. 2 relates to verification and allowing the carry forward forward forward and and and set set set off off off of of of the the the unabsorbed unabsorbed unabsorbed depreciation depreciation depreciation of of of Rs.2,19,59,912/- of earlier years against. In ground No. 3, the of earlier years against. In ground No. 3, the of earlier years against. In ground No. 3, the assessee has agitated agitated short for credit TDS of Rs.12,87,281/ short for credit TDS of Rs.12,87,281/-. Both these issue are subject matter of the verification at the end of the subject matter of the verification at the end of the subject matter of the verification at the end of the Assessing Officer and therefore, we restore these two issues to the Assessing Officer and therefore, we restore these two issues to the Assessing Officer and therefore, we restore these two issues to the file of the Assessing Officer for verification and allow in accordance file of the Assessing Officer for verification and allow in accordance file of the Assessing Officer for verification and allow in accordance with law. The additional ground No. 2 & 3 are accordingly allow The additional ground No. 2 & 3 are accordingly allow The additional ground No. 2 & 3 are accordingly allowed for statistical purpose. for statistical purpose.