2015 (5) TMI 1005 - AT - Income Tax

Rectification of mistake - allocation of interest while working out eligible profits for deduction under section 80-IB(10) - Held that - Tribunal while deciding the issue has clearly mentioned that the onus was entirely on the assessee to demonstrate the actual utilization of interest-bearing funds for a particular project and the assessee admits that the utilization of projectwise borrowed funds and interest cannot be identified from the examination of the common bank account. Under these circumstances, we find the Tribunal upheld the order of the Ld. CIT(A) and therefore, in our opinion, there is no apparent mistake in the order of the Tribunal so as to rectify the same within the meaning of section 254(2) of the Act. The assessee through this Miscellaneous Application wants the Tribunal to modify its own order which amounts to review of its own order by the Tribunal which is not permissible in the law. In this view of the matter, the Miscellaneous Application filed by the assessee is devoid of any merit and therefore, is dismissed. - Decided against assessee

Summary

Issues Involved:
1. Allocation of interest while working out eligible profits for deduction under section 80-IB(10) of the Act.
2. Grant of deduction under section 80-IB(10) of the Act in respect of the housing project "Kumar Padmalaya."

Issue-wise Detailed Analysis:

1. Allocation of Interest for Deduction under Section 80-IB(10):

The assessee filed Miscellaneous Applications to recall the Tribunal's order dated 30.04.2014 for assessment years 2006-07 and 2007-08, arguing that there was an error in the allocation of interest while computing eligible profits for deduction under section 80-IB(10) of the Act. The assessee contended that the Assessing Officer wrongly apportioned interest expense between eligible and non-eligible 80-IB(10) projects, reducing the profits from eligible projects and consequently recomputing the deduction under section 80-IB(10).

The CIT(A) rejected the assessee's argument, stating that the business was composite, and borrowed funds were used as working capital for various projects. As there was no one-to-one linkage between borrowed funds and their deployment in non-eligible projects, the interest expenditure was treated as a period cost and debited to the common profit & loss account.

The Tribunal, after considering the submissions, upheld the CIT(A)'s decision. The Tribunal noted that the onus was on the assessee to demonstrate the actual utilization of interest-bearing funds for specific projects, which the assessee failed to do. The Tribunal found no apparent mistake in its order, stating that the assessee's request amounted to a review of its own order, which is not permissible by law. Consequently, the Miscellaneous Application (MA No.75/PN/2014) filed by the assessee was dismissed.

2. Grant of Deduction under Section 80-IB(10) for "Kumar Padmalaya":

In MA No.76/PN/2014, the assessee requested the Tribunal to recall its order and adjudicate the ground related to the disallowance of deduction under section 80-IB(10) for the housing project "Kumar Padmalaya," which had inadvertently remained unadjudicated.

The Tribunal acknowledged that the specific grounds regarding the disallowance of Rs. 1,01,94,782/- under section 80-IB(10) for "Kumar Padmalaya" were not addressed in the original order. The Tribunal agreed to recall the order for the limited purpose of adjudicating these grounds.

Conclusion:

The Tribunal dismissed the Miscellaneous Application (MA No.75/PN/2014) concerning the allocation of interest expenses, affirming the CIT(A)'s decision. However, it partly allowed MA No.76/PN/2014, agreeing to recall the order to adjudicate the unaddressed grounds related to the deduction under section 80-IB(10) for the housing project "Kumar Padmalaya." The final pronouncement was made in the open court on 22-05-2015.