ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 4, PUNE vs. PUNE MUMBAI REALTY PVT.LTD, PUNE

आदेश / ORDER

PER VIKAS AWASTHY, JM

This appeal by the Department is directed against the order of Commissioner of Income Tax (Appeals)-3, Pune dated 27.06.2017 for the assessment year 2010-11.

2 ITA No.2463/PUN/2017 A.Y.2010-11

(Appeals) by raising following grounds:

“1. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of interest expenditure of Rs.81,79,110/- without appreciating the fact that it in turn leads to over valuation of qualifying assets (stock in trade in the assessee’s case) that will affect the future profitability with the same amount at the time of sale of such qualifying assets. 2. On the facts and circumstances of the case, the CIT(A) erred in not appreciating the fact that the interest so capitalized as qualifying assets are trading assets in case of the assessee as it is involved in the business of Sale and Purchase of Land. 3. The appellant prays to be allowed to add, amend, modify, rectify, delete or raise any grounds of appeal during the course of appellate proceedings.”

scrutiny assessment proceedings, the Assessing Officer observed that the

assessee company had advanced interest free loans to the persons namely i)

Kruti Jain; ii) L.K. Jain (HUF) and iii) L.K. Jain. Before the Assessing Officer,

assessee filed no objection for the addition vide letter dated 08.02.2013. In First

Appellate Proceedings, the assessee disputed the grant of any concession for

making addition. The Commissioner of Income Tax (Appeals) deleted the addition

on the premise that the entire interest component has been capitalized in

qualifying assets and the disallowance has resulted in reducing quantum of

interest attributable to qualifying assets.

vehemently supported the findings of Commissioner of Income Tax (Appeals).

The ld. AR submitted that alleged letter of concession dated 08.02.2013 referred

to by the Assessing Officer in the assessment order was never filed by the

assessee.

3 ITA No.2463/PUN/2017 A.Y.2010-11

issue raised in appeal by the Department is against deleting of disallowance of

interest expenditure Rs.81,79,110/-. Undisputedly, the assessee has advanced

interest free loans to three persons namely i) Kruti Jain; ii) L.K. Jain (HUF) and

iii) L.K. Jain. I observe that the Assessing Officer has made addition merely on

the basis of alleged no objection given by the assessee for making addition vide

letter dated 08.02.2013 and the Commissioner of Income Tax (Appeals) deleted

the addition by holding that disallowance has resulted into reducing the

quantum of interest. Both the Authorities below have failed to examine merits

and true facts before deciding the issue in hand.

is a matter of debate as letter granting concession dated 08.02.2013, is not

available before the Tribunal. Dehors the concession allegedly allowed by the

assessee for the addition, I deem it appropriate to remit the issue back to the file

of Commissioner of Income Tax (Appeals) for adjudicating the issue on merits.

The Commissioner of Income Tax (Appeals) will decide the issue afresh after

affording sufficient opportunity of hearing to the assessee, in accordance with

law. Accordingly, the impugned order is set aside and appeal of the Revenue is

allowed for statistical purpose in the terms aforesaid.

In the result, appeal of the Revenue is allowed for statistical purpose. 7.

Order pronounced on Monday the 26th day of November, 2018.

Sd/- (�वकास अव�थी /VIKAS AWASTHY) �या�यक सद�य/JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 26th November, 2018. SB

4 ITA No.2463/PUN/2017 A.Y.2010-11

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-3, Pune. 4. The Pr. CIT-2, Pune. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.