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Facts
The Revenue appealed against the CIT(A)'s orders for AY 2013-14 and 2014-15, challenging the deletion of additions made under Section 80-IA(4)(iii) and the disallowance of interest expenditure. The assessee had been claiming deduction under Section 80-IA(4) since AY 2005-06.
Held
The Tribunal held that the issue of deduction under Section 80-IA(4) and the disallowance of interest expenditure were covered by previous consistent decisions of the Tribunal and High Court in the assessee's own case. Following the principle of consistency, the grounds raised by the Revenue were dismissed.
Key Issues
Whether the deletion of additions under Section 80-IA(4) and disallowance of interest expenditure by the CIT(A) is justified, following the principle of consistency with previous years' orders.
Sections Cited
80IA(4), 36(1)(iii)
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Income Tax Appellate Tribunal, DELHI BENCH “F”, DELHI
Before: SHRI VIKAS AWASTHY & SHRI MANISH AGARWAL
ORDER PER VIKAS AWASTHY, JM: These two appeals by the Revenue are directed against the order of Commissioner of Income Tax (Appeals)-24 (hereinafter referred to as ‘the CIT(A)’) dated 12.12.2018 for AY 2013-14 and order dated 14.12.2018 for AY 2014-15. 2. Since, in both appeals identical ground has been raised by the Revenue, these appeals are taken up together for adjudication and are decided by this common order.
AY 2013-14 3. The Revenue in appeal has assailed the order of CIT(A) on following grounds: “
1. 1. On the facts and in the circumstances, the Ld.CIT(A) has erred in deleting the additions made by the AO u/s 80IA (4)(iii) of the Act amounting to Rs.47,10,734/-without appreciating the facts mentioned by the A.O. in assessment and without considering the facts that the impugned issue is pending for adjudication before the Hon'ble in preceding years i.e. in A.Y.s 2011-12 and 2012-13.
2. On the facts and in the circumstances, the Ld.CIT(A) has erred in deleting the disallowance made by the AO on account of interest paid being expenses amounting to Rs.4,24,74,737/-without appreciating the findings of the A.O. and without considering the facts that the impugned issue is pending for adjudication before the Hon'ble ITAT in preceding years i.e. in A.Y.s 2011-12 and 2012-13.”
4. Shri Sudesh Garg, appearing on behalf of the assessee/respondent at the outset submitted that both issues assailed by the Revenue in appeal are squarely covered by the order of Tribunal in assessee’s own case in the preceding assessment years. The ld. Counsel for the assessee submitted that the assessee has been claiming deduction u/s. 80IA(4) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) since AY 2005-06. The Assessing Officer (AO) has been consistently disallowing assessee’s claim of deduction u/s. 80IA(4) of the Act since the first year of claim in AY 2005-06. From AY 2005-06 to 2009-10, the assessee’s claim was allowed by the Tribunal. From AY 2010-11 onwards, the CIT(A) has been accepting assessee’s claim and have been allowing deduction u/s. 80IA(4) of the Act to the assessee. The Department carried the issue in appeal before the Tribunal for each of the assessment years. The Department’s appeal for each of the assessment years were dismissed by the Tribunal.
& 1834 /DEL/2019 (A.Ys. 2013-14 & 2014-15) He further submitted that the issue raised by Revenue in ground no. 2 of appeal relating to deleting of disallowance of interest expenditure was carried by the Revenue till Hon’ble Delhi High Court. The Hon’ble High Court in for AY 2015-16 vide order dated 10.07.2023 has dismissed appeal of the Revenue.
Ms. Harpreet Kaur Hansra, representing the department supported the assessment order. However, the ld. DR fairly stated that in the preceding assessment years both issues have been considered by the Tribunal.
Both sides heard, orders of the authorities below examined. The assessee’s claim of deduction u/s. 80IA(4) of the Act has been disallowed by the AO on the presumption that the assessee is not carrying out any activity of operating and maintaining IT Parks, hence, is not an eligible “undertaking” as defined under the Industrial Park Scheme 2002. The assessee’s claim of deduction u/s. 80IA(4) of the Act has been consistently disallowed by the AO since the first year of assessee’s claim in AY 2005-06. Whereas, the assessee’s claim of deduction u/s. 80IA(4) of the Act was allowed by the Tribunal right from the beginning. We find that from AY 2010-11 onwards, the assessee’s claim of deduction u/s. 80IA(4) of the Act was accepted by the CIT(A). The Revenue carried the issue in appeal before the Tribunal. The Tribunal upheld the order of CIT(A) dismissed Revenue’s appeal. In the impugned assessment year, the Revenue has assailed the order of CIT(A) only for the reason that appeals of the Revenue for AY 2011-12 and 2012-13 are still pending before the Tribunal. The ld. Counsel for the assessee has placed on record a copy of order of the Tribunal in assessee’s case for both abovementioned assessment years. The appeal of the Revenue in for AY 2011-12 was dismissed by the Tribunal vide order dated 23.08.2019 on account of & 1834 /DEL/2019 (A.Ys. 2013-14 & 2014-15) low tax effect. The appeal of the Revenue in ITA No. 5988/Del/2017 for AY 2012- 13 was dismissed by the Tribunal vide order dated 17.01.2022 observing as under:- “8. We have gone through the record in the light of the submissions made on either side. As recorded in the preceding paragraphs, consistently the Tribunal and the Hon’ble High Court holding the issue relating to the claim of the assessee under section 80IA of the Act in favour of the assessee and the same stands undisturbed for the assessment year 2010-11 also. In this year also, Ld. CIT(A) granted relief to the assessee by following this consistent view taken in assessee’s own case for the earlier assessment years by his predecessor as well as the higher fora, namely, the Tribunal and the Hon’ble High Court.
Both the authorities below recorded a finding that the facts are similar for this year also as those are for the assessment years 2005-06 to 2011-12. In these circumstances we are of the considered opinion that in the absence of any compelling changed circumstances, the consistent view taken in assessee’s own case for the earlier years are not be disturbed. While respectfully following the same, we hold the issue in favour of the assessee and return a finding that the deletion of the disallowance of claim of assessee under section 80IA of the Act by the Ld. CIT(A) is neither illegal nor irregular and the same has to be upheld. Consequently, we dismiss ground No. 1 of Revenue’s appeal.” We see no reason to take a different view. The CIT(A) has allowed assessee’s claim of deduction u/s. 80IA(4) of the Act following the judicial discipline and principle of consistency. Hence, ground of appeal
no. 1 of the Revenue’s appeal is dismissed.
7. As regards the second issue relating to disallowance of interest expenditure, the Revenue has assailed, the order of CIT(A) for similar reason i.e. appeals of the Revenue for immediate preceding assessment year are pending before the Tribunal. As pointed earlier, the appeal of the Revenue for AY 2011-12 and 2012-13 (supra) have been dismissed by the Tribunal. Here it would be & 1834 /DEL/2019 (A.Ys. 2013-14 & 2014-15) relevant to mention that even in the subsequent assessment year assessee’s claim of interest expenditure was upheld by the Tribunal in Department’s appeal in vide order dated 08.08.2022. The Revenue carried the issue in appeal before the Hon’ble High Court in ITA No. 354/2023. The Hon’ble High Court vide order dated 10.07.2023 upheld findings of the Tribunal. For the sake of completeness, relevant extract of the Hon’ble High Court order in appeal filed by the Department is reproduced herein below:- “13. Therefore, what we must, at this stage, determine is whether, in the instant case, any substantial question of law arises for our consideration? 13. As noticed above, consistently, over the period spanning between AY 2005-06 and AY 2011-12, interest paid by the respondent/assessee to the bank has been allowed as expenditure under the provisions of Section 36(1)(iii) of the Act. 13.1 The odd years are AY 2012-13, 2013-14, 201415 and 2015-16. The CIT(A), however, made a course-correction by reversing the view of the AO even for those years. The Tribunal has sustained the view taken by CIT(A) in AY 2015-16, which is the AY under consideration in the instant appeal lodged before us.
14. Given this backdrop, the moot point which arises for consideration is, two- fold. 15.1 First, does the respondent/assessee need to demonstrate commercial expediency in each year concerning a loan transaction which took place in and about AY 2005-06? 15.2. Secondly, ultimately, would the appellant/revenue incur any loss of revenue whether interest is allowed in the hands of the respondent/assessee i.e., the partnership firm or its partner? 16. The answer to the first question is obvious. If the loan availed on account of stated commercial expediency, which has, in a sense, received the imprimatur of the appellant/revenue when the loan was first taken and several years thereafter, surely, the respondent/assessee is not required, once again, to demonstrate commercial expediency in each year. The AO seems to have disregarded this aspect in the AY in issue.
& 1834 /DEL/2019 (A.Ys. 2013-14 & 2014-15) 17. Second, the revenue cannot but accept that the interest expenditure is revenue neutral. In case this was to be disallowed in the hands of respondent/assessee i.e., the partnership firm, it would have to be allowed in the hands of the partners.
Thus, for the foregoing reasons, we are not inclined to interfere with the decision of the Tribunal.”
In light of aforesaid decision and following the rule of consistency in a situation where the facts are static, we see no reason to interfere with the findings of the CIT(A). The ground of appeal
no.2 is dismissed.
9. In the result, impugned order is upheld and appeal of the Revenue is dismissed. for AY 2014-15
10. Both sides unanimously stated that the facts and grounds of appeal for the impugned assessment year are identical to AY 2013-14. After examining the grounds raised by the Revenue in appeal, we find that they are identical to AY 2013-14, thus, the findings given by us while adjudicating appeal of the Revenue for AY 2013-14 would mutatis mutandis apply to the impugned assessment year as well. For parity of reason, appeal of the Revenue is dismissed.