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TMI Blog2018 (11) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... k in trade in the books of account then whenever the assessee sales the land or any part of the land in question, the same will be business income of the assessee and the expenditure which is incurred for taking loan for purchase of land in question cannot be disallowed on the ground that after purchasing the land, the assessee has not carried out any business activity. Hence, in view of the undisputed fact that the assessee has right from the year in which the land in question was purchased treated the same as stock in trade in the books of account then the Assessing Officer cannot substitute the business decision of the assessee merely because there was no subsequent activity of sale of land. Accordingly, the claim of the assessee is an allowable revenue expenditure and in absence of any business income, the same would be allowed as carry forward of the losses for the A.Y. 2004-05. - ITA Nos. 957 & 958/JP/2015 - - - Dated:- 31-10-2018 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri A.B. Dangyach (FCA) For the Revenue : Shri J.C. Kulhari (JCIT) ORDER PER: VIJAY PAL RAO, J.M. These two appeals by the assessee are dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on account of interest on term loan for purchase of land. The Assessing Officer disallowed the said claim of expenses by treating the same as capital in nature and added the same to the income of the assessee. The matter was carried to this Tribunal for both the assessment years i.e. 2004-05 and 2005-06 wherein the assessee has raised an additional ground regarding treating the loss declared by the assessee as capital loss arising from sale of land whereas the land was shown as stock in trade by the assessee. The Tribunal after considering the arguments vide order dated 04/6/2010 held in para 5 to 7 as under: 5. After considering the submissions and perusing the material on record, we are of the considered view that matter needs reverifications. It is seen that land in question was shown as stocking trade in past accordingly the sale proceeds were treated as business receipts by the assessee. However, the A.O. rejected the claim of the assessee by observing that assessee was required to file the details in support of the claim however assessee failed to file such details. The findings have been recorded in last but one para at page 2 of his order. 6. Counsel of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purchase of land is an allowable deduction which was debited by the assessee in the P L account under the head financial expenses and claimed as revenue expenses. Hence, the ld AR has submitted that whatever expenditure incurred in purchase of stock in trade be allowed as revenue expenditure. The ld AR has relied upon the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. Vijay Solvex Ltd. 274 CTR 384. He has relied upon the following decisions: (i) K. Sampath Kumar Vs CIT 158 ITR 0025 (Mad) (ii) Orient Cosmetics Ltd. Vs DCIT 69 TTJ 0490 (ITAT Madras) 5. On the other hand, the ld DR has submitted that there is no business activity carried out by the assessee during all these years and therefore, once the factum of no business activity of purchase and sale of land is not in dispute then mere entries in the books will not decide the nature of transaction. He has referred to the finding of the Assessing Officer as well as the ld. CIT(A) and submitted that the assessee has shown only lease rental income for all these years against which the financial charges has been claimed as deduction. Once it is not in dispute that the financial charges claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings are also being initiated for the furnishing of the wrong facts U/s 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer has accepted that the assessee has done some operation for doing business of so called sale of plots/residential houses/commercial complexes. However, the Assessing Officer denied the claim on the ground that the assessee has done only one activity i.e. taking of units for sale for which no activity has been done or any concrete steps taken for the same. During the appellate proceedings before the ld. CIT(A), the assessee has reiterated its claim which was also referred to the Assessing Officer for filing the remand report even in the remand report, the Assessing Officer has not disputed the fact that for the earlier years i.e. the A.Y. 2002-03 onwards, the assessee has shown the land in question as stock in trade, however, since the returns were processed U/s 143(1), therefore, the Assessing Officer did not accept the claim for the year under consideration. The ld. CIT(A) has not disputed the fact that the assessee has shown the property under consideration as stock in trade as referred in para 3.1.2 (vii) page 17 and 18 as under: 3.1.2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely because there was no subsequent activity of sale of land. Accordingly, the claim of the assessee is an allowable revenue expenditure and in absence of any business income, the same would be allowed as carry forward of the losses for the A.Y. 2004-05. 7. The appeal for the A.Y. 2005-06, the assessee has raised following grounds of appeal: 1. On the facts and in circumstances of the case, the ld. CIT(A) was not justified in confirming the disallowance of following expenses made by A.O. which were rightly claimed by appellant company as revenue expenses: (i) Interest paid to the bank ₹ 5,29,936/- (ii) Other interest ₹ 11,38,908/- (iii) Pre payment charges of fee ₹ 1,44,550/- (iv) Bank Charges ₹ 252/- ₹ 18,13,646/- 2. On the facts and in circumstances of the case, the ld A.O. was not justified in confirming the order of Assessing Officer and assessing income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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