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Income Tax Appellate Tribunal, DELHI BENCH ‘C NEW DELHI
Before: SHRI J.S. REDDY & SHRI SUDHANSHU SRIVASTAVA
impugned order dated 12.03.2013 passed by the Ld. CIT(A)-XXXI, New Delhi for assessment year 2009-10.
2. The facts, in brief, are as under:- 2.1 Search and seizure operation u/s 132 of the Income Tax Act was carried out in Rajdarbar Group of cases on 31.07.2008.
During search operation, certain documents were seized which allegedly belonged to the assessee company. The case of the Assessment Year: 2009-10 assessee company was transferred to Central Circle - 12 from Central Circle-5, New Delhi under section 127 of the Income Tax Act, 1961 by the orders of Ld. Commissioner of Income Tax (Central)-I, Delhi vide F. No. CIT(C)- 1/Del/Centralisation/1/2009-10/2888 dated 25.03.2010.
3. Notice u/s 142(1) of Income Tax Act, 1961 dated 02.08.2010 was issued to the assessee company, requiring it to file the return for the Assessment Year 2009-10. Return of income for the Assessment Year 2009-10 was filed by the assessee on 10.09.2010 declaring income of Rs. 19,09,200/-. The return filed by the assessee company was the same as that which was e-filed under section 139 of the Act on 20/04/2010. During the course of assessment proceedings, the assessee revised its return of income u/s 139(5) on 26-10-2010 declaring an income of Rs. 3,12,72,630/- .
During the post search investigation, the assessee company offered additional income of Rs. 10 crore for the AY 2009-10 on account of work in progress in the hotel project at Gurgaon. Out of the above amount, Rs. 9 crore has been shown in the hands of Sh. Rakesh Kumar Garg towards the construction of the hotel of the assessee company. In the revised return filed on Assessment Year: 2009-10 26/10/2010, the assessee has shown surrendered income of Rs. 2,93,87,834/- which includes the balance additional income of Rs. 1 crore, which was offered during search. In other words, the assessee and Shri Rakesh Kumar Garg (Main Promoter of the assessee company) have shown additional income of Rs. 10,00,00,000/- as surrendered during the search proceedings.
During the assessment year 2008-09, the assessee company received a sum of Rs. 100 crore from M/s Pramerica ASPF II Cyprus Holding Limited, 11, Florinis Street City Forum, 7th Floor, 1065, Nicosia, Cyprus on account of 4% fully & Mandatory Convertible Debentures. During the year, the assessee company has paid interest on debentures to the tune of Rs. 4,18,63,014/- and capitalized the same in the cost of the hotel project. The above amount of Rs. 100 crore was deposited in Union Bank of India A/c no. 307801010917171 on 05/02/2008 and same day the amount was transferred to sister concern M/s Global Realty Venture Ltd. (GRVL) and this company transferred the same amount on the very same day to another sister concern M/s Narendra Impex Ltd., which used the amount against payment made to NBCC Ltd. as advance against property at NBCC Plaza, New Delhi. No interest was charged from M/s GRVL by the Assessment Year: 2009-10 assessee and AO was of the opinion that the assessee had diverted the debenture amount of Rs. 100 crore received from the foreign company to M/s GRVL without interest but had, however, paid interest of Rs. 4,18,63,014/- to the foreign company. The assessee had claimed the above payment as advances to contractor & suppliers. The AO held that the interest of Rs. 4,18,63,014/- paid to the foreign company was not to be allowed to be capitalised in the cost of the hotel.
Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority which was also dismissed. Now, the assessee has filed this appeal before the Tribunal and has subsequently revised the grounds of appeal. The following grounds of appeal have been raised in the revised grounds of appeal:-
“1. The Ld. CIT (A) has erred on facts and in law in confirming the assessment of the appellant passed without satisfying the substantive and procedural requirements under section 153C of the Income tax Act.
2. Without prejudice to the other grounds of appeal, the Ld. CIT (A) has erred on facts and in law in confirming the assessment order under section 143(3) of the Income tax Act, 1961 passed with the approval of the Additional CIT, Range-Ill, New Delhi vide his letter F. No. Addl. CIT (CR)-111/2010-11/814 dated 27.12.2010 when law does not stipulate any such Assessment Year: 2009-10 approval. 3. Without prejudice to the other grounds of appeal, the Ld. CIT (A) has erred on facts and in law in confirming the additions which were not based on the incriminating material found and seized during the course of search.
4. Without prejudice to the other grounds of appeal
, the Ld. CIT (A) has erred on facts and in law in confirming the disallowance of capitalization of interest of Rs. 4,18,63,014/- incurred on payment of debentures interest to overseas investors ignoring the fact that the sums on which interest expenditure was incurred were used for commercial expediency and were raised at a very low rate of interest.
5. Without prejudice to the other grounds of appeal, the Ld. CIT (A) has erred on facts and in law in confirming the disallowance of capitalization of interest of Rs. 4,18,63,0147- even if assuming the funds received from the overseas investors were not directly applied to the hotel project as the appellant had made substantial investment of interest free fund in the hotel project before the foreign funding was received.
The Ld. AR submitted that this Tribunal was pleased to quash the assessment order passed u/s 143 (3)/153C for AY 2008-09. Copy of this order is placed in the Paper Book from page number 74 to 88. This order was the subject matter of appeal u/s 260A of the Act before the Hon'ble Delhi High Court and the Hon'ble High Court was pleased not to admit the same.
Assessment Year: 2009-10 Copy of the order of the Hon'ble Court is placed at Page number 73 of the Paper Book.
It was submitted that the order of the AO ostensibly passed u/s 143(3) should be considered to have been passed u/s 153C r.w.s. 143(3). For this argument the Ld. AR drew our attention to the order passed by the co-ordinate Bench of the Tribunal in the case of the group concern M/s Natural Product Bio Tech Ltd. (Placed in the Paper Book at Page number 7 to 22) wherein the co-ordinate Bench of the Tribunal treated the order for the year of search as order passed u/s 153C.
The Ld. AR further submitted that the Department raised this specific issue in the appeal before Hon'ble Delhi High Court that that the order for AY 2009-10 was not even passed u/s 153C so the order of the Tribunal was erroneous therefore, needed to be set aside. It was further submitted that considering this direct precedent in the assessee group itself, the assessment order under appeal though ostensibly similarly stated to have been passed u/s 143(3) should be considered to have been passed u/s 153C and quashed.
Learned Departmental Representative, however, strongly contended that as long as there was no ambiguity in the 6 Assessment Year: 2009-10 statutory language, resort to any interpretative process to unfold the legislative intent would be impermissible. He relied on the decision of the Hon'ble Apex Court in the case of Keshavji Raviji & Co. Vs CIT 1883 ITR 1 (SC) for this proposition. The learned Departmental Representative also argued that there was no scope for importing into the statute words which were not there. He relied on the case of Smt. Taralata Shyam & Ors vs C.I.T. 108 ITR 345 (SC) for the same. The learned Departmental Representative also relied on the case of CIT vs Anil Kumar Bhatia 24 taxmann.com 98 (Delhi) for the proposition that the provisions of section 153C are not automatic and they can be invoked only if certain conditions were fulfilled.
We have heard the rival submissions and carefully perused the records. We are inclined to concur with the submissions of the Ld. AR that the impugned order of the Assessing Officer ostensibly passed u/s 143(3) of the Act should be considered to have been passed u/s 153C read with section 143(3) in view of the decision rendered by the Hon'ble Delhi High Court in the case of Pr. Commissioner of Income Tax-2 vs Natural Products Bio- Tech Ltd. in wherein the facts were identical.
The relevant portion is reproduced as under:-
Assessment Year: 2009-10 “This appeal by the Revenue is directed against the order dated 28lh November 2014 passed by the Income Tax Appellate Tribunal (‘ITAT’) in for the Assessment Year ('AY') 2009-10. The question sought to be urged is whether the ITAT was correct in upholding the order of the CIT (A) that since the requisites of Section 153-C of the Act were not satisfied and the assessment proceedings stood vitiated.
On 14th August 2015, this Court passed an order in the present appeal, the relevant portion of which reads as under: “3. The point urged by the Revenue in this Appeal against the order dated 28th November, 2014 of the ITAT in DEL/2013 pertaining to the Assessment Year (‘AY’) 2009-10 is that the Assessment itself was framed only under Section 143 (3) of the IT Act and therefore the ITAT was in error in proceeding on the basis that it was under Section 153C of the Act. 4. Learned counsel for the Respondent/Assessee on the other hand drew the attention of this Court to para 9 of the Assessment Order which states that it has been passed with the prior approval of the Addl. CIT Central Range-Ill, New Delhi vide his letter dated 28th December, 2010. He submits that this was the prior approval that was required, in terms of Section 153 D of the Act, to initiate proceedings under Section 153 C of the Act. 5. The learned Counsel for the Revenue states that he needs some time to examine this aspect. At his request list on 29th September, 2015.”
The Court is today informed that the submission of the learned counsel for the Assessee made on the previous occasion is correct. 4. The point involved in the resent appeal stands covered against the Revenue by the order passed by this Court on 14th August 2015 in ITA Nos. 569, 570, 571 of Assessment Year: 2009-10 2015 (Pr. Commissioner of Income Tax v. Natural Products Bio Tech Ltd.).
5. No substantial question of law arises for determination by this Court.
6. The appeal is dismissed.”
Respectfully following the ratio laid down by the Hon'ble Delhi High Court in the case of Natural Products Bio-Tech Ltd. as aforesaid, we hold the impugned assessment order a nullity and quash the same. The other grounds are not adjudicated having become academic.
In the result, the appeal of the assessee is allowed.