2015 (2) TMI 1256 - AT - Income Tax

Addition on account of interest paid outside books of accounts on PDCs - Held that - The PDCs have been encashed within a period of six months as is apparent from page 11 of assessment order where A.O. has noted the date of sale of properties and date of encashment of cheques. Therefore we find that the facts in the present case are similar to that of group companies of ISG Estates (P) Ltd. 2015 (2) TMI 12 - ITAT DELHI therefore following the Tribunal order in the case of group company we dismiss this appeal of Revenue.

Summary

Issues Involved:
Revenue's appeal against deletion of addition of interest paid outside books of accounts.

Analysis:
The judgment revolves around the Revenue's appeal against the deletion of an addition of interest paid outside the books of accounts by the assessee company, which is engaged in real estate business. The Revenue's grievance was with the action of the Ld. CIT(A) in deleting the addition of Rs. 29,74,652 made by the Assessing Officer (A.O.). The A.O. made the addition after finding that the assessee company had paid interest in cash to vendors of land on monthly basis, which was not accounted for in its books of accounts. The Ld. CIT(A) partly allowed relief to the assessee by considering the seized documents as evidence of interest paid on post-dated cheques (PDCs). The Ld. CIT(A) concluded that interest on PDCs for the extended period was reasonable and logical, and directed the A.O. to recompute interest on PDCs after six months from the date of issue of PDCs if the extension period could not be determined in each case.

The Tribunal analyzed similar cases involving group companies of BPTP and referred to the findings in the case of ISG Estate (P) Ltd. where the interest on PDCs was deleted by the CIT(A) as the PDCs were encashed within six months from the date of issue. The Tribunal noted that the facts in the present case were similar to those of the group companies of ISG Estates (P) Ltd. and, therefore, dismissed the Revenue's appeal based on the precedent set by the earlier case. The Tribunal upheld the deletion of the addition of interest paid outside the books of accounts by the assessee company, in line with the decision regarding similar cases involving group companies of BPTP.

In conclusion, the judgment focused on the treatment of interest paid on PDCs outside the books of accounts by the assessee company, considering seized documents as evidence of such payments. The Tribunal's decision was influenced by the findings in similar cases involving group companies of BPTP, where the interest on PDCs was deleted if encashed within six months from the date of issue. The judgment highlights the importance of consistent application of legal principles and precedents in tax matters, ensuring fair treatment across similar cases.