ACIT, CIRCLE- 27(1), NEW DELHI vs. UNITECH HOLDINGS LTD., NEW DELHI

When the appeal was called out for hearing, none appeared on behalf of the assessee to represent the case despite service of notice of hearing, as evidenced by postal acknowledgement kept on record. In view of the aforesaid, we proceed to dispose of the appeal ex parte qua assessee after hearing learned Departmental Representative and based on materials available on record.

Briefly, the facts are, the assessee is a resident corporate entity stated to be engaged in the business of non-banking financial activities. In course of assessment proceedings, the Assessing Officer, on examining the financial statement of the assessee, noticed that the assessee has shown an amount of Rs.130,09,26,212/- as outstanding balance of share application money as on 31.03.2013. He observed that the amounts have remained outstanding for a period of more than 60 days, which is a reasonable period for allotment of shares. From the aforesaid facts, he concluded that in the garb of share application money, the assessee has chosen to forego the substantial amount of interest, which ought to be added to its income. Accordingly, he imputed interest @ 14% on the outstanding share application money and made addition of Rs.18,21,29,670/-. The assessee contested the aforesaid addition before learned first appellate authority. Being convinced with the submissions of the assessee, learned first appellate authority deleted the addition.

We have heard learned Departmental Representative and perused the materials on record. As could be seen from the observations of learned first appellate authority, identical addition made by the Assessing Officer in assessee’s own case in assessment year 2010-11 was deleted by the Tribunal in ITA No. 3266/Del/2014. It is further observed, in case of assessee’s holding company, Unitech Ltd., as well, similar issue was decided by the Tribunal in favour of the assessee in in assessment year 2011-12, Admittedly, the addition made by the Assessing Officer is nothing but notional interest computed on the share application money given to various companies by the assessee. Before us, learned Departmental Representative was not in a position to controvert the fact that in the preceding assessment years, the issue has been decided in fovour of the assessee and its holding company.

Next issue relates to disallowance of expenses of Rs.17,31,561/- u/s. 14A of the Act read with Rule 8D.

Having heard learned Departmental Representative, we find, it is the case of the assessee from the assessment stage itself that it has not earned any exempt income during the year under consideration.

In the result, appeal is dismissed.