ACIT, New Delhi v. M/s. Amrapali Realtors Pvt. Ltd., New Delhi

ITA 1734/DEL/2016 | 2012-2013
Pronouncement Date: 27-09-2016 | Result: Allowed

Appeal Details

RSA Number 173420114 RSA 2016
Assessee PAN AAMFA9540M
Bench Delhi
Appeal Number ITA 1734/DEL/2016
Duration Of Justice 5 month(s) 26 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Amrapali Realtors Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2016
Appeal Filed By Department
Order Result Allowed
Bench Allotted SMC 1
Tribunal Order Date 27-09-2016
Date Of Final Hearing 26-09-2016
Next Hearing Date 26-09-2016
Assessment Year 2012-2013
Appeal Filed On 01-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL ACCOUNTANT MEMBER ITA NO.1734/DEL/2016 ASSESSMENT YEAR : 2012-13 ACIT CENTRAL CIRCLE-2 NEW DELHI. VS. AMRAPALI REALTORS PVT. LTD. R-19 3 RD FLOOR MAIN SHAKARPUR MARKET VIKAS MARG NEW DELHI. PAN: AAMFA9540M (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI RAJESH KUMAR SR. DR DATE OF HEARING : 26.09.2016 DATE OF PRONOUNCEMENT : 27.09.2016 ORDER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE CIT(A) ON 14.1.2016 IN RELATION TO THE ASSES SMENT YEAR 2012-13. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE DELETION OF DISALLOWANCE OF RS.34 52 749/- MADE BY THE AO ON AC COUNT OF INTEREST ON LOANS GIVEN TO THE PARTNERS OF THE ASSESSEE-FIRM. ITA NO.1734/DEL/2016 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE GAVE INTEREST FREE LOANS AMOUNTING TO RS.12.10 CRORE TO ITS TWO P ARTNERS NAMELY SHRI MANOJ KUMAR RAY AND SHRI SANJEEV KUMAR SHARMA. THE AO OBSERVED THAT THE ASSESSEE BORROWED MONEY FROM CORPORATION B ANK AND PAID INTEREST ON TERM LOAN AMOUNTING TO RS.34 52 749/-. HE THEREFORE COMPUTED NOTIONAL INTEREST @ 6% PER ANNUM ON THE A MOUNT ADVANCED BY THE ASSESSEE TO ITS PARTNERS. BY LIMITING IT TO THE EXTENT OF THE ABOVE INTEREST PAID BY THE ASSESSEE TO THE BANK HE MADE AN ADDITION OF RS.34 52 749/-. THE LD. CIT(A) DELETED THE ADDITIO N BY OBSERVING THAT NO ADVANCE WAS GIVEN TO THE PARTNERS DURING THE YEAR A ND THE OUTSTANDING BALANCES WERE OLD. HE FURTHER TOOK NOTE OF CIT(A) S ORDER FOR AY 2011- 12 IN WHICH INTEREST PAID ON TERM LOAN WAS DISALLOW ED WHICH ADDITION WAS DELETED IN THE FIRST APPEAL. THE REVENUE IS AGGRIE VED AGAINST SUCH DELETION OF ADDITION. 4. I HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSE E DESPITE NOTICE. IT IS OBSERVED THAT THE AO MADE DISALLOWANCE OF INTEREST ON THE GROUND THAT A ITA NO.1734/DEL/2016 3 SUM OF RS.12.10 CRORE WAS GIVEN AS INTEREST FREE LO ANS TO THE TWO PARTNERS WHEREAS THE ASSESSEE PAID INTEREST TO THE BANK. TH E LD. CIT(A) DELETED THE ADDITION BY OBSERVING THAT NO ADVANCES WERE MADE TO THE PARTNERS DURING THE INSTANT YEAR WHICH AMOUNTS WERE BROUGHT FORWARD BALANCES. APART FROM THAT THE LD.CIT(A) ALSO TOOK INTO CONSIDERATI ON THE ORDER PASSED BY HIM FOR THE AY 2011-12 IN WHICH THE ADDITION WAS DE LETED WHICH WAS IN FACT MADE ON ACCOUNT OF INTEREST PAID BY THE ASSES SEE TO THE CUSTOMERS AS COMPENSATION FOR DELAY IN THE COMPLETION OF PROJECT AND THE INTEREST SO PAID WAS CAPITALIZED TO THE CLOSING WORK-IN-PROGRES S. I FIND THAT THERE IS NO RELEVANCE OF THE CIT(A)S ORDER PASSED FOR THE A Y 2011-12 INSOFAR AS THE ISSUE UNDER CONSIDERATION IS CONCERNED. ADMITT EDLY THE ASSESSEE ADVANCED LOANS AND ADVANCES TO ITS PARTNERS. SINCE THE ASSESSEE IS A PARTNERSHIP FIRM THE RELEVANT FACT WHICH OUGHT TO HAVE BEEN TAKEN INTO CONSIDERATION WAS IF THE ASSESSEE WAS PAYING INTERE ST TO THE PARTNERS ON THE CAPITAL ACCOUNTS AND THE BUSINESS EXPEDIENCY IF AN Y IN ADVANCING THESE TWO LOANS. THERE IS NO DISCUSSION IN THE ASSESSMEN T ORDER OR THE IMPUGNED ORDER ABOUT THESE TWO FACTORS WHICH ARE OF IMMENSE IMPORTANCE AS FAR AS THE ISSUE UNDER CONSIDERATION IS CONCERNED. IF THE ASSESSEE WAS PAYING ITA NO.1734/DEL/2016 4 INTEREST TO THE PARTNERS ON THE CAPITAL BALANCE TH EN THERE COULD HAVE BEEN NO REASON FOR NOT CHARGING ANY INTEREST ON LOANS AN D ADVANCES GIVEN TO THE PARTNERS IF SUCH LOANS WERE NOT FOR ANY BUSINESS E XPEDIENCY. THESE RELEVANT ASPECTS NEED TO BE TAKEN INTO CONSIDERATIO N IN DECIDING THE MAKING OR OTHERWISE OF ADDITION ON ACCOUNT OF INTER EST FREE LOANS ADVANCED TO PARTNERS. AS THE IMPUGNED ORDER IS SILENT ON THI S ASPECT OF THE MATTER I SET ASIDE THE ORDER PASSED BY THE LD. FIRST APPELLA TE AUTHORITY AND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING IT AFRESH IN TERMS OF ABOVE DISCUSSION AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 5. IN THE RESULT THE APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 27.09.20 16. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED 27 TH SEPTEMBER 2016. DK ITA NO.1734/DEL/2016 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT AR ITAT NEW DELHI.