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TMI Blog2019 (8) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... siness also differs. Therefore as officers of the department, we should be more practical and pragmatic while making assessment of the companies. Having concluded that the interest paid by the assessee is duly allowable under Income Tax Act as the loan to the subsidiaries has been given for the purpose of its business, it is also directed that the disallowance of the interest cost - Decided against revenue Addition of all expenditure debited to profit and loss account - alleged non commencement of business - payment of brokerage and commission for booking of flats - HELD THAT:- AO ignored the crucial fact that there is payment of brokerage and commission for booking of flats to different brokers and in the next AY 2011-12, the assessee had shown total income of ₹ 209.92 crs. on which paid taxes of ₹ 75.41 crs. Thus, we are in the 4th year of business of the assessee company but the Assessing Officer wrongly mentioned that the assessee did not started its business on AY 2010-11 (4th year of filing return).Thus, the CIT(A) has rightly deleted this addition - Decided against revenue - I.T.A. No. 1465/DEL/2016, I.T.A. No. 1464/DEL/2016 - - - Dated:- 5-8-2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/- in respect of disallowances on account of expenditure debited to profit and loss account as well as disallowed interest claimed of ₹ 14,39,12,048/- on the basis of percentage completion method in such subsequent assessment years. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. DR submitted that the CIT(A) erred in deleting the addition made on account of interest expense capitalizing realistic under development which was not at all disallowed to the assessee. As regards Ground no. 2, the Ld. DR submitted that the CIT(A) erred in deleting the addition of ₹ 3,24,94,319/- made on account of all expenditure debited profit and loss account. As the Assessing Officer was wrongly mentioned that the benefits was not commenced. The Ld. DR relied upon the Hon ble Apex Court order in case of Add.CIT vs. Tulip Star Hotels Ltd. (2012) 21 taxmann.com 97 (SC) and Hon ble Delhi High Court decision in case of Punjab Stainless Steel Inds. Vs. CIT (2011) 196 Taxman 404 (Delhi). 6. The Ld. AR relied upon the assessment order as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng profits . In order to claim a deduction, it is enough to show that the money is expended on ground of commercial expediency. The AO has wrongly interpreted the fact of the case and mentioned in his assessment order that the above preposition in not applicable. Through, the preposition laid by the decision of Supreme Court is completely applicable in the instant case, as the loans given to its subsidiary companies in order to achieve its business objects and the assessee has a deep interest in the business of subsidiary companies. Thus the interest on loan taken being meant for the purpose of business is duly allowable as business expenditure. These 2 case laws interpreted by AO are not proper. The first case law on SA Builders says that interest disallowance on loans and advances given to group concerns should not be disallowed on the basis of commercial expediency. If interest is disallowed in one company, then interest is to be added as income of the other company, then both transactions taken together will not add extra revenue to the department. The companies are assessed at a flat tax rate of 30% slab. Therefore, these 2 transactions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. 2 of the appeal is allowed. Thus the CIT(A) has rightly allowed this issue with a detailed finding as well as by discussing the case laws referred by the Assessing Officer. The reliance by the Ld. DR on the decisions of Tulip Star Hotels Ltd. (supra) and Punjab Stainless Steel Inds. (supra) are not at all relevant as the factual aspect in the present case is totally different. There is no need to interfere with the observations of the CIT(A). Ground no. 1 of the revenue s appeal is dismissed. 8. As regards ground no. 2 the assessee has commenced its business in 2006 itself and was filing return since Assessment Year 2007-08. The present assessment year is the fourth year of filing return of income. The CIT(A) held as under: GROUND NO. 3:- The assessee is real estate developer/builder. The company was incorporated on 25.07.2006. The appellant had filed its income tax return for AY 2007-08 showing total loss of ₹ 32,619/-. The appellant had filed income tax return for AY 2008-09 showing loss of ₹ 64,074/- and also filed ITR for AY 2009-10 showing total loss of ₹ 62,220/-. In the FY 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going on, and where in the 4th year of business, the expenditure claimed by the appellant in the P L A/c cannot be summarily rejected on the ground that no sales activity or sale recognization have been made by the appellant company. Therefore, the observation of the AO in rejecting appellant s explanation and disallowing all the expenses claimed in P L A/c of ₹ 3,24,94,319/- in the P L A/c is not justified. Hence, the ground no. 3 of the appeal is allowed, and addition of ₹ 3,24,94,319/- is deleted. The Assessing Officer ignored the crucial fact that there is payment of brokerage and commission for booking of flats to different brokers and in the next AY 2011-12, the assessee had shown total income of ₹ 209.92 crs. on which paid taxes of ₹ 75.41 crs. Thus, we are in the 4th year of business of the assessee company but the Assessing Officer wrongly mentioned that the assessee did not started its business on AY 2010-11 (4th year of filing return). Thus, the CIT(A) has rightly deleted this addition. There is no need to interfere with the findings of the CIT(A). 9. As regards appeal for assessment year 2011- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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