TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 163
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....09-10 & 2012-13, it was observed that the decision not to file the appeal for AY 2011-12 was taken based on categorical report of lower authorities that there was nexus between funds borrowed and the funds advanced. However, there could not have been a complete nexus which was evident from quantum of interest earned and interest expanded, which fact was not brought to the notice and the same resulted into delay in filing of appeal. Another plea raised is the fact that Ld. CIT(A) failed to appreciate that neither the business had commenced not it was carried out during the year under consideration. In the above background, the Ld. DR pleaded for condonation of delay. The Ld. Authorized Representative for Assessee (AR), on the other hand, opposed the condonation for want of sufficient cause for delay in filing of appeal. As per Ld. AR, limitation could not be condoned on the ground of compassion or equitable considerations or where the party seeking condonation appears to be callous or negligent. Reliance has been placed, inter-alia, on the decision of Hon'ble Supreme Court rendered in Office of the Chief Post Master General & or V/s Living Media India Ltd. & Anr. (348 ITR 7) for the....
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....y resorting to delay. In fact, he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. Keeping in mind the aforesaid principles, the bench formed an opinion that the delay was to be condoned and the appeal was to be proceeded with as per the merits of the case. Decision on Merits 3. The grounds raised by the revenue read as under: - i) Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that there was a nexus between interest bearing borrowings and interest yielding advances ignoring that, at best, there was only partial nexus and not complete nexus as evidenced by the fact that interest earned was Rs. 1,44,41,920/- whereas interest paid on borrowings made for making the interest yielding advances was Rs. 2,38,56,459/-? ii) Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that notwithstanding a partial nexus between interest paid on borrowings utilized for interest yielding advances, the entire interest attributable to bo....
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.... offered by the assessee. The failure of the assessee to defend the same during the course of assessment proceedings led Ld. AO to treat the interest income as income from other sources. Consequently, interest expenditure was not allowed as deduction since the assessee failed to substantiate the nexus of interest expenditure with the interest income earned by the assessee. 5.4 The interest expenditure was also not allowed by invoking explanation to Section 37(1) since the assessee, in the opinion of Ld.AO, could not carry out the business of money lending and such activity was in violation of provisions of the Bombay Money Lenders Act. In the alternative, Ld. AO held that the excess interest of 4% amounting to Rs. 40.96 Lacs being paid to one of the lender entities was to be disallowed u/s 36(1)(iii) / 57 of the Act. 5.5 Finally, the interest income was assessed under the head Income from other sources and total income was determined at Rs. 146.65 Lacs. The interest expenditure of Rs. 238.56 Lacs was not allowed as deduction either u/s 36(1)(iii) or u/s 57 of the Act. 6.1 Before learned CIT(A), the assessee, inter-alia, submitted that the assessee had borrowed funds for the pur....
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....by learned first appellate authority that the assessee had already started real estate business and given and received advances for this purpose in earlier years also. In fact, the assessee earned profit from real estate business in AY 2008-09. To support the same, the details of income earned by the assessee during AYs 2008-09 to 2010-11 has already been tabulated in para 5.1.1 of the impugned order. 7.2 Upon perusal of various clauses of Memorandum of Association (MOA), it was seen that although the primary business of the assessee was to acquire / develop properties but the assessee could invest and deal with the money of the company not immediately required. The assessee could receive deposits as well as advance money and therefore, it could not be said that the said activity violated the objectives of the assessee. Reliance was placed, inter-alia, on the decision of Hon'ble Bombay High Court rendered in CIT V/s Lok Holdings (308 ITR 356) wherein it was held that interest received by the assessee property developer, on temporary deposits of surplus money out of advances received by from intending purchases was business income and not income from other sources. In the above bac....
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....uld reveal that similar interest income has been accepted by revenue as business income in scrutiny assessment proceedings u/s 143(3) for AYs 2013-14 to 2014-15. In AYs 2008-09, 2010-11 & 2015-16, there was no scrutiny assessment and assessee's claim was accepted in self-assessment. Further, relying upon AY 2011-12, similar view was taken by Ld. CIT(A) in AY 2012-13, against which revenue preferred further appeal before this Tribunal vide ITA No. 5582/Mum/2016 order dated 06/02/2017 wherein the appeal of the revenue was dismissed. 10. Finally, the undisputed findings are that the assessee, in terms of its Memorandum of Association, could receive deposits as well as advance money and therefore, it could not be said that the said activity violated the objectives of the assessee. The ratio of decision of Hon'ble Bombay High Court rendered in CIT V/s Lok Holdings (308 ITR 356) was clearly applicable wherein it was held that interest received by the assessee property developer, on temporary deposits of surplus money out of advances received by from intending purchases was business income and not income from other sources. Therefore, no fault could be found in the impugned order, in th....