2017 (7) TMI 1444 - AT - Income Tax

Deduction u/s 80IA(4) - conditions of IPS-2008 were not fulfilled by the assessee - assessee s project was not notified by the Govt. for claim of deduction u/s 80IA(4) for the A.Y. under consideration - HELD THAT - We are making reliance on the said decision of Tribunal in assessee s own case 2016 (8) TMI 1586 - ITAT PUNE and M/s. Kolte Patil Developers 2015 (3) TMI 363 - ITAT PUNE we uphold the order of CIT(A) in allowing the claim of deduction under section 80IA(4)(iii). Deduction u/s 80IB(10) in respect of Kumar Puram project - Tribunal had noted the said issue as already decided the issue in assessment year 2001-02 and relying on the same held the issue to be identical and allowed the claim of assessee. AO in the present case has also disallowed the claim of assessee under section 80IB(10) of the Act in respect of Kumar Puram project in turn relying on the assessment orders in earlier years. Revenue has failed to point out any difference in the factual aspects and consequently we find no merit in the ground of appeal No.2 raised by the Revenue and the same is rejected. The grounds of appeal raised by the Revenue are thus dismissed. Disallowance of interest expenditure under section 36(1)(iii) - availability of interest free funds - HELD THAT - The issue arising in the present appeal is identical to the issue before the Tribunal in earlier years and even the advances were made in earlier years and following the same parity of reasoning we remit this issue also back to the file of Assessing Officer to determine the availability of interest free funds and also to work out the disallowance of interest under section 36(1)(iii) of the Act if any in line with directions of Tribunal in earlier year. The Assessing Officer shall afford reasonable opportunity of being heard to the assessee. Accordingly grounds of appeal No.6 to 6.3 raised by the assessee are allowed for statistical purpose. The grounds of appeal raised by the assessee are thus partly allowed as indicated above.

Summary

Issues Involved:
1. Validity of the revised return filed by the assessee.
2. Claim of depreciation on assets leased to Kumar City Club Pvt. Ltd.
3. Disallowance of interest expenditure under section 36(1)(iii) of the Income-tax Act.
4. Deduction under section 80IA(4) of the Income-tax Act.
5. Deduction under section 80IB(10) of the Income-tax Act.

Issue-Wise Detailed Analysis:

1. Validity of the Revised Return Filed by the Assessee:
The assessee contended that the revised return was filed within the prescribed time under section 139(5) and should have been considered while determining the income. The CIT(A) rejected the revised return, stating it was not bona fide and aimed to postpone tax liability. The CIT(A) held that the reversal of sale consideration and the write-off of the amount receivable from Milestone Developers were not bona fide transactions. The Tribunal noted that the assessee did not press these grounds of appeal, and hence, they were dismissed as not pressed.

2. Claim of Depreciation on Assets Leased to Kumar City Club Pvt. Ltd.:
The CIT(A) disallowed the depreciation claimed by the assessee on assets leased to Kumar City Club Pvt. Ltd., stating that the assets were not used for business purposes. The assessee argued that the assets were used for business purposes, and the depreciation was rightly claimed. However, the Tribunal noted that the assessee did not press these grounds of appeal, and hence, they were dismissed as not pressed.

3. Disallowance of Interest Expenditure Under Section 36(1)(iii) of the Income-tax Act:
The Assessing Officer disallowed the interest expenditure, noting that the interest-bearing funds were not used wholly and exclusively for business purposes. The CIT(A) upheld this disallowance. The Tribunal, referring to its decision in the assessee's own case for earlier years, remitted the issue back to the Assessing Officer to ascertain the availability of interest-free funds at the time of giving advances. If the assessee had sufficient interest-free funds, no disallowance should be made. The grounds of appeal related to this issue were allowed for statistical purposes.

4. Deduction Under Section 80IA(4) of the Income-tax Act:
The Assessing Officer denied the deduction under section 80IA(4), citing non-fulfillment of conditions. The CIT(A) allowed the deduction. The Tribunal referred to its earlier decision in the assessee's own case and the case of M/s. Kolte Patil Developers Ltd., where it was held that the project was notified under IPS 2008, and the deduction was allowable. The Tribunal upheld the CIT(A)'s order, allowing the deduction under section 80IA(4).

5. Deduction Under Section 80IB(10) of the Income-tax Act:
The Assessing Officer disallowed the deduction under section 80IB(10) for the Kumar Puram project, following the assessment orders of earlier years. The CIT(A) allowed the deduction. The Tribunal referred to its earlier decision in the assessee's own case, where the deduction was allowed. The Tribunal found no merit in the Revenue's appeal and upheld the CIT(A)'s order, allowing the deduction under section 80IB(10).

Conclusion:
The appeal of the assessee was partly allowed, and the appeal of the Revenue was dismissed. The Tribunal remitted the issue of interest expenditure back to the Assessing Officer for verification and upheld the CIT(A)'s order on the deductions under sections 80IA(4) and 80IB(10).