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Income Tax Appellate Tribunal, CUTTACK
Before: SHRI N.S SAINI
This is an appeal filed by the assessee against the order of CIT(A)-
1, Bhubaneswar, dated 19.9.2016 for the assessment year 2012-13.
The sole issue involved in this appeal is that the CIT(A) erred in
confirming Rs.43,74,405/- shown in the profit and loss account as income
from other sources.
I have heard the rival submissions, perused the orders of lower
authorities and materials available on record. In the instant case, the
assessee is engaged in the business of real estate development. During
2 ITA No. 07/ CTK/2017 Asse ssment Year :20 12- 201 3
the year under consideration, the only revenue of the assessee was interest
income of Rs.43,74,405/-. The assessee claimed business expenditure of
Rs.29,01,409/- and set off from the said interest income and disclosed net
income of Rs.14,72,996/- as its total income. The Assessing Officer
observing that no revenue was earned from real estate business held that
the business of the assessee has not commenced by the end of the relevant
previous year and, therefore, disallowed the entire business expenditure.
He treated the interest income of Rs.43,74,405/- as “ income from other
sources” and as no expenditure was found to be incurred for earning
interest income., he computed the income at Rs.43,74,405/-.
On appeal, the CIT(A) confirmed the action of the Assessing Officer.
In my considered view simply because no revenue was generated
during the year, from this fact alone, it cannot be concluded that no actual
business was commenced. I find on perusal of assessee’s audited financial
statement that raw material consumed during the year was
Rs.1,43,75,246/- and the inventory in the form of work-in-progress as at
the end of the relevant previous year was Rs.1,43,75,246/-. The above
facts are not in dispute. The above evidences show that the assessee
commenced its business of real estate development during the year under
consideration. Therefore, in my considered view, the lower authorities were
not justified in holding that business was not commenced during the year
and consequently in disallowing business loss of Rs.29,01,409/-. As
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the business loss of the current year is allowed to be set off against “income
from other sources”, I, therefore, set aside the orders of lower authorities
and delete the disallowance of Rs.29,01,409/-. Thus, the grounds of appeal
of the assessee are allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 15 /06/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER
Cuttack; Dated 15 /06/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The appellant : M/s. Baibhav Properties (P) Ltd., Plot No.717, BJB Nagar, Bhubaneswar. 2. The Respondent. ITO, Ward - 1(1),Bhubaneswar
The CIT(A) -1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//
BY ORDER,
SR.PRIVATE SECRETARY ITAT, Cuttack