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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: HON’BLE SHRI AMARJIT SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
सुनवाई की तारीख/ : 28/01/2021 Date of Hearing घोषणा की तारीख / : 04/02/2021 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Facts as well as issues in aforesaid appeals by revenue for Assessment Years 2014-15 & 2015-16 are common and therefore the appeals were heard together and are now being disposed-off by way of this common order for the sake of convenience & brevity. M/s. Bebanco Developers Ltd. Assessment Years: 2014-15 & 2015-16 2. The appeal for AY 2014-15 contest the order of learned Commissioner of Income Tax (Appeals)-12, Mumbai [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-12/ACIT- 6(1)(3)/445/2016-17 dated 12/03/2019 qua deleting addition of interest disallowance of Rs.398.52 Lacs. The assessment for the year under consideration was framed by Ld. Assessing Officer u/s 143(3) on 27/12/2016. The assessee being resident corporate assessee is stated to be engaged in development of infrastructure projects.
We have carefully heard the rival submissions and perused relevant material on record including the orders of lower authorities. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 4.1 The impugned interest disallowance stems from the fact that during assessment proceeding, it transpired that the assessee entered into an agreement on 30/03/2013 with its holding company namely B.E.Billimoria & Co. Ltd. (BEBL) wherein Lohegaon Project situated at Pune being developed by M/s BEBL was assigned to the assessee. As per terms of the agreement, the assets in the shape of Advances for purchase of Land for Rs.70.04 Crores, Loans to Gammon & Billimoria Ltd. (GBL) for Rs.46.33 Crores as well as Land development cost of Rs.26.51 Crores was transferred to the assessee. Similarly, the liabilities in the shape of Advances received for Rs.62.32 Crores was also transferred to the assessee whereas the balance amount of Rs.80.56 Crores payable by the assessee was to be treated as loan payable by the assessee to M/s BEBL along with interest. M/s. Bebanco Developers Ltd. Assessment Years: 2014-15 & 2015-16 4.2 During the year, the assessee earned interest income of Rs.423.17 Lacs on advances given to M/s GBL and paid interest of Rs.398.52 Lacs to its holding company M/s BEBL. The net interest income was offered to tax. However, Ld. AO opined that advances given to M/s GBL by M/s BEBL had no connection with Lohegaon project which had not even started. Therefore, the interest earned by the assessee would be assessable as income from other sources and the netting off of the interest cost could not be allowed. Finally, the interest expenditure as claimed by the assessee was disallowed.
Upon further appeal, Ld. CIT(A) appreciated the factual matrix as well as assessee’s financial statements and deleted the disallowance with following findings and observations: -