TaxTMI 
TaxTMI 
2018 (11) TMI 128
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....allowing the above expenses as revenue expenses. The above expenses should have been allowed as loss and should have been allowed to carried forward for set off against the income of succeeding assessment year of appellant company. 3. On the facts and in circumstances of the case the ld. CIT(A) has grossly erred in treating the land as capital asset and capitalizing the interest on the loan, processing fee and bank charges etc. incurred for purchase of land which has been shown as stock in trade of appellant company. 4. On the facts and in circumstances of the case, the ld. CIT(A) was not justified in disallowing following losses assessed U/s 143(1)(a) for carried forward and set off against the income of succeeding assessment years:- Assessment year 2002-03 Rs. 7,90,560/- Assessment year 2003-04 Rs. 19,59,896/- 5. The appellant craves leave to add, alter, amend or withdraw any ground or grounds of appeal at or before the hearing." 2. The assessee is a company and dealing in immovable properties. The assessee purchased land from JDA during the financial year 2001-02 for a consideration of Rs. 2,95,65,124/-. The assessee took loan for pur....
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....nd consequently the total income of the assessee was assessed at Rs. 6,76,830/-. 3. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and claimed that the interest expenditure is an allowable claim U/s 36(1)(iii) of the Income Tax Act, 1961 (in short the Act). The ld. CIT(A) called for a remand report from the Assessing Officer. In the remand report, the Assessing Officer has stated that the assessee has not furnished any further evidence after the matter was set aside by the Tribunal and therefore, the disallowance made by the Assessing Officer in the original assessment was not found to be disturbed. The ld. CIT(A) has confirmed the order of the Assessing Officer on the ground that there was no business and trading activity during the years under consideration as well as for the assessment year 2002-03 and 2003-04 and the assessee has shown only income as rental income from the properties taken by it on lease from its group concern. Therefore, the financial charges claimed as deduction against the lease rental income is not permissible in view of the ld. CIT(A). 4. Before us, the ld AR of the assessee has submitted that the Assessing Officer ....
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....s to the assessee. The ld DR has relied upon the order of the ld. CIT(A). 6. We have considered the rival submissions as well as the relevant material on record. It is clear from the earlier order of this Tribunal dated 04/06/2010 that the Assessing Officer was directed to verify the fact whether the land in question was shown as stock in trade in past and consequently the sale proceeds to be treated as business receipt. The scope of enquiry in the remand proceedings was only to ascertain whether the land in question was shown by the assessee as stock in trade and therefore, any income or expenditure incurred in respect of the stock in trade would be revenue in nature. The Assessing Officer in the order passed pursuant to the remand order of the Tribunal has observed and held as under: "From the above submission of the assessee, it was clear that it had done some operation for doing the business of so called sale of the plots/residential houses/commercial complexes. But for doing the business as claimed has one and only one that the activity for the booking of the units for sale, for which no activity has been done or any concrete steps taken for the same. Thus....
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.... in trade or capital asset, the intention of the party has to be taken into consideration. The assessee has undisputedly right from the year in which the land in question was acquired shown it as stock in trade in the books of account from year after year and therefore, it is not a case of claiming the land in question as stock in trade only for the year under consideration. The revenue has not disputed that for the A.Y. 2002-03 and 2003-04, the assessee's claim was accepted U/s 143(1) of the Act and therefore, if non-scrutiny of the return of income cannot be taken against the assessee once the fact of showing the land in question as stock in trade is not in dispute. Accordingly, even if there is no sale transaction after purchasing of land in question, but when the lands in question is shown as stock 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 ....