TaxTMI 
TaxTMI 
2024 (10) TMI 644
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....m of statement from the assessee which was never filed before the AO earlier and adjudicating in favour of Assessee on that basis without fulfilling the conditions of Rule 46A of IT Rules, 1962, thereby denying AO the opportunity to examine the same? 2. Whether on the facts and in the circumstances of the case and in law, the decision of Ld.CIT(A) is not perverse in admitting the additional evidence filed by the assessee after a time gap of 7 years (between original assessment proceedings concluded on 15.10.2009 and hearing before CIT(A) in impugned order) and allowing relief to the assessee without appreciating that such statement of interest to establish the nexus of borrowed funds and investment in FDRs was never filed by the assessee before any of the authorities who had decided the issue earlier and without examining why the same was not filed before any of these authorities who had decided the issue earlier? 3. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of Assessing Officer be restored" 2.1. Grounds taken by the assessee are reproduced as under: A. Grounds of Appeal vide Form 36 dt. 01-02-2019 1) Th....
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.... 2) Without prejudice, on facts and circumstances of the case, the id Assessing Officer has erred in law in not increasing/restating the "Capital Work in Progress" to the extent of additional interest income of Rs. 10,56,49,189/-made by the id. Assessing Officer under the heat Income From Other Sources' which was reduced by the assessee from Capital Work in Progress in its Balance Sheet General 3) The above grounds of appeal are without prejudice to one another and the original grounds a appeal and the appellant craves leave to add, alter, amend, delete or modify any of the above grounds of appeal. C. Revised Ground of Appeal vide letter dt. 26-12-2023 in respect of Ground No.04 in Form 36 1) a) The Id. CIT(A) erred in facts and in law in restricting the deduction of interest expenditure u/s. 57(iii) of the Act to Rs. 1,72,15,048/- from the interest income on Fixed deposit as against the interest expense of Rs. 8,87,83,570-claimed by the assessee b) The Id. CIT(A) and ld. Assessing Officer failed to appreciate that one to one nexus per se is not relevant for allowing the deduction of interest expense u/s. 57(iii) of the Act. c) Without p....
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....ordinate Bench of ITAT passed u/s.143(3) r.w.s. 254 dated 30.12.2016, pursuant to the order of Co-ordinate Bench, dated 16.12.2015, wherein the Co-ordinate Bench had set aside the matter to the file of ld. Assessing Officer and directed the ld. Assessing Officer to decide afresh the quantum of interest expenditure to be allowed against interest income. It is worthwhile to reproduce the directions of the Coordinate Bench given while setting aside the matter as aforesaid: "10.1 Para no.5 of Hon'ble ITAT order dated December 16, 2015 Both Id. AR add DR fairly conceded that in view of the above decision of Tribunal, matter is required to be set aside to the file of AO for deciding afresh the quantum of interest expenditure to be allowed against interest income" 10.2 Para no. 6 of Hon'ble ITAT order dated December 16, 2015: ............Respectfully following the order of the Tribunal in assessee's own case, we set aside the matter back to the file of AO for deciding afresh the quantum of interest expenses to be allowed against interest expenses, in terms of direction given by the Tribunal. Copy of Hon'ble ITAT order "B" Bench, Mumbai dated Dece....
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....ent u/s 143 (2), ld. Assessing Officer rejected the assessee's claim of commencement of business and accordingly disallowed all the expenditure and taxed receipts amounting to Rs. 13,56,67,377/- under the head "Income from other sources". Aggrieved, assessee went in appeal before the ld. CIT(A). 4.3. Ld. CIT(A) partly allowed the appeal of the assessee and directed the ld. Assessing Officer to ascertain those expenses which are directly related to earning of this income from other sources and the same should be allowed as expense for earning such income u/s 57 of Act. Ld. Assessing Officer, passed an order on 03.02.2012, giving effect to directions of ld. CIT(A), in respect of allowing expenditure u/s 57 of the Act, related to earning of income from other sources, but did not allow the aforesaid expenses. Aggrieved, assessee once again went in appeal before the ld. CIT(A) who vide order dated 21.12.2012, allowed only 10% of expenditure which is debited to Profit and Loss account as expenditure u/s 57 against income from other sources. Aggrieved, assessee went in appeal before the Tribunal. Co-ordinate Bench of ITAT heard the case on 16.12.2015 and the matter was set aside to the....
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....x on the income of the assessee. In the year under consideration, this issue has not been taken before the authorities below and is raised for the first time before us as a pure point of law which is relevant to determine the tax liability of the assessee. 5.3. In the present case, only a fresh appraisal of the facts in the context of the legal issue raised by the assessee is required to be undertaken and no new facts are to be investigated. The bonafide of the additional ground so raised by the assessee are not contested and therefore, in the given set of facts and circumstances, the additional ground so raised is admitted for adjudication. While doing so, the ratio of the judgment of Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. (supra) fortifies the admission of the said ground for adjudication. Since this additional ground goes to the root of the matter, we are inclined to take it up first before dealing with all other grounds taken by the assessee as well as by the Revenue, in their respective appeals. 6. To deal with this additional ground, we appraise ourselves with Article 289 of the Constitution of India which is reproduced as under: ....
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.... of Som Prakash Rekhi vs. Union of India reported at AIR 1981 SC 212 culled out certain tests to determine as to when a Corporation should be said to be an instrumentality or agency of the State. The tests laid down by the Hon'ble Apex Court are summarized as under: "1. If the entire share capital of the corporation is held by the Government, It would go a long way towards indicating that the corporation is an instrumentality or agency of the Government. 2. Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. 3. Whether the Corporation enjoys monopoly status which is State conferred or State protected. 4. If the functions of the corporation are of public importance and closely related to governmental functions. It would be a relevant factor in classifying the corporation as an instrumentality or agency of the Government 5. If a department of a Government is transferred to a corporation, it would be a strong factor supporting this inference of the corporation being an instrumentality or agency of the Government." 7.2. After applying the cumulative effect o....
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....tate Intra-state and Inter-state Connectivity, to encourage overall growth of aviation sector in the State and to ensure planned development around airports. 8.3. The shareholding structure as well as constitution of Board of the assessee is pictorially represented as under for better understanding: 9. On the above stated factual status/setup of the assessee, we note that identical additional ground was raised by the assessee before the Co-ordinate Bench of ITAT in its appeal for Assessment Year 2012-13 and 2015-16 in ITA No. 3682/Mum/2017 and ITA No.522/Mum/2019, respectively, which was admitted and adjudicated upon to hold that assessee is an arm of the State, thus an instrumentality of the State. The relevant observations and findings of the Co-ordinate Bench in this respect are reproduced below for ready reference. 22. In order to decide the issue in controversy we would decide if the assessee company is a state while executing the work of development of airports, repair and maintenance of airports as an arm of the state, 23. Undisputedly the assessee company was incorporated as a company under the Companies Act, 1956 by the Government of Maharashtra as ....
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....t all the development proposals of the assessee company are sent to the state government for approval as required under section 115 of the MRTP Act. (v) that the assessee company is required to submit the timely reports/returns etc. to the state government from time to time as required under section 155 of the MRTP Act. vi) that under section 160 of the MRTP Act a state government can dissolve the special planning authorities and upon dissolution its properties, the liabilities, undischarged functions shall get transferred to the state government. vii) that as per sub-section 3A of section 113 of MRTP Act any corporation/company or subsidiary company which is into the work of developing and disposing of land in the area of a new town is an agent of the state government. Sub section 3A of section 113 of the Act reads as under: "(3A) Having regard to the complexity and magnitude of the work involved in developing any area as a site for the new town, the time required for setting up new machinery for undertaking and completing such work of development, and the comparative speed with which such work can be undertaken and completed in the public inter....
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.... case at hand the assessee company is also appointed as a town planning authority under sub section 3A of section 113 of MRTP Act for acquisition of land for development of airports, repair and maintenance of airports and for rehabilitation of the project affected persons (POP), for infrastructure development of airports in the notified area as an agent of the state. The assessee company carries out all the activities for and on behalf of the state government and after development and completion of the project the entire property vests in the state government. The entire control over the assessee company is of state government being exercised through the officer of the state government. In these circumstances the assessee company is an agent of the state not assessable to tax. As such grant-in-aid received by the assessee company from the Government of Maharashtra for land acquisition, development of airports, repair and maintenance of airports etc. is not a capital receipt as has been held by the Ld. CIT(A) rather the assessee company has performed these functions as an agent of the state and as such not assessable to income tax xii) that the assessee company has been for....
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....rpose of implementing the scheme. 10. Having considered the above findings of the Co-ordinate Bench of ITAT in assessee's own case as well as in other decisions referred above, we are in agreement with the same to hold the assessee to be a State, being an instrumentality / agent of the State, thereby resulting in its interest income earned on fixed deposits not chargeable to tax. Further, we note that clause (2) of Article 289 provides an exception and authorises the Union to impose a tax in respect of the income derived by the Government of a State from trade or business carried out by it or on its behalf. In this respect, it is undisputed fact that ld. Assessing Officer has himself assessed the interest income on fixed deposits under the head "income from other sources". The said interest income thus, cannot be said to be derived from trade or business carried out by the assessee. Accordingly, clause(2) of the Article 289 is inapplicable. Since the assessee is held to be a State, or a surrogate of the State or an agent, performing the functions of the State and /or on behalf of the State of Maharashtra, whereby its income is not chargeable to tax within the meaning of clause(1....