2012 (11) TMI 1226 - AT - Income Tax

Tribunal decision: Appeal dismissed for Revenue, partly allowed for assessee. Tax, overhead expenses, project losses remitted for reassessment.

The appeal filed by the Revenue was dismissed, and the appeal filed by the assessee was partly allowed. The Tribunal upheld the deletion of disallowance ... - Issues Involved:1. Deletion of disallowance of Rs. 4,77,99,935/- in respect of accumulated loss brought forward from preceding previous years.2. Taxability of Rs. 17,23,91,106/- in respect of interest on deemed accrual basis.3. Deductibility of overhead expenditures amounting to Rs. 31,21,93,576/-.4. Disallowance of losses in respect of housing and development projects.5. Deduction in respect of Rs. 46,818/- disallowed u/s 40(a)(ia) in the preceding year.Summary:Issue 1: Deletion of Disallowance of Rs. 4,77,99,935/-The short issue to adjudicate was whether the ld. CIT(A) was justified in deleting the disallowance of Rs. 4,77,99,935/- in respect of accumulated loss brought forward from preceding previous years. The CIT(A) observed that the sum of Rs. 4,77,99,92,935/- was the balance brought forward from previous years and could not be taxed as income for the financial year ending 31st March 2008. The Tribunal upheld the CIT(A)'s decision, noting that the amount pertained to preceding years and could not be taxed in the current year.Issue 2: Taxability of Rs. 17,23,91,106/- on Deemed Accrual BasisThe issue was whether the CIT(A) was justified in upholding the taxability of Rs. 17,23,91,106/- in respect of interest on deemed accrual basis. The CIT(A) held that there was no evidence to show that the recovery of loans and interest was doubtful. The Tribunal remitted the matter to the Assessing Officer to determine the actual status of recovery of principal and interest, directing the assessee to provide all related facts and submissions.Issue 3: Deductibility of Overhead ExpendituresThe issue was whether the overhead expenditures amounting to Rs. 31,21,93,576/- were deductible. The CIT(A) disallowed the deduction, stating that there was no evidence to show that the expenditures were related to the business. The Tribunal remitted the matter to the Assessing Officer for fresh adjudication, directing a detailed examination of the facts and a speaking order.Issue 4: Disallowance of Losses in Housing and Development ProjectsThe issue was whether the CIT(A) was justified in disallowing losses of Rs. 5,79,03,511/- and Rs. 66,57,12,685/- for housing and development projects, respectively. The CIT(A) disallowed the losses due to lack of evidence. The Tribunal remitted the matter to the Assessing Officer for fresh adjudication, emphasizing the need to consider anticipated losses in business profit computation.Issue 5: Deduction of Rs. 46,818/- Disallowed u/s 40(a)(ia)The issue was whether the CIT(A) erred in not allowing the deduction of Rs. 46,818/- disallowed u/s 40(a)(ia) in the preceding year. The Tribunal restored the issue to the Assessing Officer for fresh adjudication, allowing the assessee to produce the requisite challan evidencing payment of taxes.Conclusion:The appeal filed by the Revenue was dismissed, and the appeal filed by the assessee was partly allowed, with several issues remitted back to the Assessing Officer for fresh adjudication.