TaxTMI 
TaxTMI 
2016 (11) TMI 288
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....sessee is an urban development authority formed by an Act passed by the Uttar Pradesh Legislature Assembly and is engaged in urban development of Meerut and for providing low cost housing to general public. Two grounds for all the assessment years are identical. For the assessment year 2004-05 one other ground has been taken by the assessee, which relates to ad hoc disallowance of 56% of expenses. The two common grounds that arise in all the three appeals are: (a) disallowance of interest pertaining to closing stock; and (b) treatment of grants received from the Government of Uttar Pradesh as revenue by the AO. 3. We have heard Shri Kapil Goel, ld. counsel for the assessee and Shri S.K. Jain, ld.Sr. DR. The assessee has filed a paper book ....
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....not disturbed the valuation of opening stock and hence, such action is bad in law. He relied on the decision of the Hon'ble Bombay High Court in the case of Lokhandwala Construction, 131 Taxman 810, the decision of the 'B' Bench of the ITAT Delhi in ITA No.2677/Del/2011 for assessment year 2006-07 in the case of DLF Ltd., Order dated 11th March, 2016, as well as the decision of the ITAT Kolkata 'B' Bench, in ITA No.1101/Kol/2012, Order dated 19th February, 2014 in the case of Cellica Developers Pvt. Ltd., and submitted that in all these cases, under similar circumstances, the expenditure incurred on loans borrowed, were allowed as revenue expenditure and was not capitalized to the value of closing stock. 6. The ld. DR, on the other hand, o....
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....lats. Secondly, the assessee was also engaged in the business of construction of buildings. The profits from the both the activities were assessed under Section 28of the Income-tax Act. In this case, we are concerned with the second activity (hereinafter referred to, for the sake of brevity, as "Kandivali Project"). According to the Commissioner, loan was raised for securing land/development rights from the Mandal. That, the loan was utilised for purchasing the development rights, which, according to the Commissioner, constituted a capital asset. According to the Commissioner, since the loan was raised for securing capital asset, the interest incurred thereon constituted part of capital expenditure. This finding of the Commissioner was erro....
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.... under Section 36(1)(iii) of the Act (See judgment of the Bombay High Court in the case of Calico Dyeing and Printing Works v. CIT, Bombay City-II, reported in 34 ITR 265). In that judgment, it has been laid down that where an assessee claims deduction of interest paid on capital borrowed, all that the assessee had to show was that the capital which was borrowed was used for business purpose in the relevant year of account and it did not matter whether the capital was borrowed in order to acquire a revenue asset or a capital asset. The said judgment of the Bombay High Court applies to the facts of this case. (emphasis ours) 8. This decision was followed by the Delhi Benches of the Tribunal in the case of DLF Ltd. (supra) and by the Kolkata....
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....he finding of the AO. 12. The ld. counsel for the assessee relied on the decision of the jurisdictional High Court, Lucknow Bench in the case of CIT, Lucknow vs. Lucknow Development Authority and other cases, 219 Taxman 162 and submitted that this very Notification of the Government of UP was considered and the Hon'ble High Court held that the sums received from the Government of UP in pursuance of this Notification cannot be treated as belonging to the authority and that the receipt is not taxable in nature. He also relied on the decisions of the co-ordinate Bench 'G' of the Tribunal in ITA No.131 and 132/Del/2009 for the AY 2003-04 and 2005-06 in the case of Saharanpur Development Authority vs. ACIT, Order dated 8th April, 2010, wherein ....
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....ee submissions that on identical issue in the AY 2004-05 the ITAT in order no.ITA 02/Del/2008 vide order dt. 23.12.2008 had deleted the addition. The Tribunal in that case has referred to the decision of Hon'ble Delhi High Court in case of CIT vs. Delhi Industrial Development Fund and also ITAT decision in the case of Karnataka Urban Infrastructure Development and Finance Corporation. The Tribunal also noted that the said decision of the ITAT was upheld by the Hon'ble High Court also in the judgement reported in 284 ITR 582. Thereafter the Tribunal held "that the case law relied upon the assessee are squarely applicable on the facts of the present case. The assessee had received the funds under the orders of the Govt. of Uttar Pradesh and i....