BELLISSIMO HI RISE BUILDERS P.LTD,MUMBAI vs. DCIT CEN CIR 7(3), MUMBAI

O R D E R Manoj Kumar Aggarwal (Accountant Member): - 1.1 Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-52, Mumbai, [in short referred to as ‘CIT(A)’],Appeal No. CIT(A)- 2 Bellissimo Hi Rise Builder Pvt. Ltd. Assessment Year-2011-12 52/IT/DCIT-CC-7(3)/296/2016-17 dated 02/03/2017 on following grounds of appeal: -

1. On the facts of the case and in law, the CIT(A) erred in confirming the disallowance of interest expenses of Rs.5,01,43,016/- u/s.36(1)(iii) on the ground that it was not incurred for business purposes.

1.2 The assessee has also raised an additional ground of appeal on 26/09/2018 which reads as under: - The Learned Commissioner of Income-Tax (Appeals) ought to have held that the disallowance of interest amounting to Rs.27,50,62,799/- suo moto made by the appellant is not required in accordance the provisions of the Income tax Act but is actually an allowable deduction under the provisions of Section 36(1)(iii)/37(1) of the Act.” Since the additional ground is inter-connected / legal ground, the same is taken on record as ground no.2. As evident from grounds of appeal, the sole subject matter of dispute before us is interest disallowance u/s 36(1)(iii). 1.3 For ease of understanding, the underlying amounts have been rounded -off toRupees in Lacs except where the figure are fully expanded. 1.4 We have carefully heard the arguments advanced by respective representatives. We have also perused relevant material on record including documents placed in the paper-book. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 2.1 Facts on record would reveal that the assessee being resident corporate assessee stated to be engaged in development and construction of real estate properties was assessed for year under consideration u/s 143(3) on 31/03/2014 wherein the income of the assessee was determined

3. Bellissimo Hi Rise Builder Pvt. Ltd. Assessment Year-2011-12 at Rs.20.81 Lacs after interest disallowance of Rs.501.43 Lacs u/s 36(1)(iii) as against returned loss of Rs.480.62 Lacs e-filed by the assessee on 30/09/2011. The assessee is stated to be 100% subsidiary of an entity namely M/s Cowtown Land Development Private Ltd. (CLDPL). During financial year 2007-08, the assessee issued 16180 secured, non-marketable, non-transferable 15.25% optionally convertible debentures of Rs.10 Lacs each aggregating to Rs.1618 Crores to M/s CLDPL. 2.2 The name of the assessee has undergone change from Lodha Hi-Rise Builders Private Limited to M/s Bellissimo Hi-Rise Builders Private Limited w.e.f. 06/01/2016 which is evident from certificate of incorporation pursuant to change of name, issued by The