AI Drafter 
TaxTMI 
TaxTMI 
2016 (11) TMI 1664
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....ubstantial questions of law but in our view only the first question would arise for consideration and subsequent questions are only the consequential aspects. Hence, we find that the main question which arise for consideration is as under : '(i) Whether the Tribunal was correct in holding that the interest deduction claimed by the assessee is an allowable deduction without taking into account the fact that the assessee had not utilised the loan amount in the course of business activity and the same had been utilised by its sister concern and consequently recorded a perverse finding ?' 3. The short facts of the case appear to be that the assessee is in the business of real estate, viz., construction of building, leasing o....
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....o the said extent. The matter was further carried in appeal before the Tribunal and the Tribunal ultimately at paragraph 5.2 has observed thus : '5.2. The Commissioner of Income-tax (Appeals) has recorded the following finding at para 5.3 (page 31) of the appellate order. Moreover the appellant company has continued to construct one building after another and also acquiring property rights in M/s. Diamond District, M/s. Platinum City and M/s. India Builders Association. So the appellant's activity as a developer and contractor is well organised and continuous.' Similar findings are also recorded at pages 31, 32 and 33 of the appellate order. Before us, the Department has not disputed the above finding of fac....
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....property income in terms of section 71 of the Act.' Under the circumstances, the present appeal by the Revenue before this court. 4. We have heard Sri Aravind, learned counsel appearing for the appellant-Revenue and also Sri Shankar, learned counsel appearing for the assessee on merits of the appeal. 5. The contention raised on behalf of the appellant-Revenue was that the finding recorded by the Tribunal about the activity of the assessee is perverse in as much as the extract of paragraph 5.3 from the order of Commissioner of Income-tax (Appeals) is wrongly construed and interpreted by the Tribunal. He submitted that the Tribunal ought to have undertaken its scrutiny for disallowance of claim of interest by considering the find....
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....ax (Appeals) on pages 32 and 33. As the said finding is not reproduced by the Tribunal in its order, we find it appropriate to reproduce the same. 8. When the Commissioner of Income-tax (Appeals) was considering the applicability of the decision in the case of CIT V. Veerabhadra Industries reported in [1999] 240 ITR 5 (AP) while distinguishing the said decision, it has been inter alia recorded as under : 'Similarly its reliance on the judgment in the case of CIT V. Veerabhadra Industries reported in [1999] 240 ITR 5 (AP) is also misplaced in that rental income in that case was held as assessable as income from house property in as much as there was only single act of construction of godown and letting it out as against the s....
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....assessee to M/s. Diamond District and M/s. Platinum City is to be treated for acquiring property rights and once it is treated as for acquiring property rights may be of a sister concern, it would be an allowable deduction under section 36 of the Income-tax Act, since it is for the business activity. 12. The aforesaid fact is coupled with the aspect that in the very observation of the Tribunal, it has been recorded as under : 'Before us, the Department has not disputed the above finding of fact recorded by the Commissioner of Income-tax (Appeals).' Meaning thereby, the aforesaid finding was not even disputed by the Department before the Tribunal. 13. The attempt on the part of the Revenue to contend that the findin....
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....ot be accepted for two reasons : One is that had such being the position, nothing prevented the Department from raising the dispute for applicability of such finding when the aspect for allowance of the interest under Section 36 of the Act was to be considered. Another is that, if on one part Commissioner of Income-tax (Appeals) who allows the claim on the ground that no evidence was produced to show the nexus and on the other part, if the Commissioner of Income-tax (Appeals) does find the activity of the assessee inter alia for acquiring property rights in M/s. Diamond District and M/s. Platinum City, which are sister concerns coupled with the aspect of such reiteration, further at two places, the earlier observations mad....