Dcit Cen Cir 3 Mumbai v. Swan Energy Ltd Mumbai

ITA 6662/MUM/2014 | 2011-2012
Pronouncement Date: 06-12-2017 | Result: Partly Allowed

Appeal Details

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RSA Number 666219914 RSA 2014
Assessee PAN xxxxxxxxxxx
Bench xxxxxxxxxxx
Appeal Number xxxxxxxxxxx
Duration Of Justice 3 year(s) 1 month(s) 2 day(s)
Appellant xxxxxxxxxxx
Respondent xxxxxxxxxxx
Appeal Type Income Tax Appeal
Pronouncement Date 06-12-2017
Appeal Filed By Department
Tags No record found
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 06-12-2017
Assessment Year 2011-2012
Appeal Filed On 03-11-2014
Judgment Text
In The Inc Ome Tax Appellate Tribunal E Bench Mumbai Before Shri Rajendra Am Shri Sandeep Gosain Jm I T A No 6662 3870 Mum 201 4 Assessment Year 2011 12 2010 11 Dcit Cen Cir 3 Room No 905 Pratistha Bhavan Marines Lines Mumbai 400020 Vs M S Swan Energy Ltd Formerly Known As Swan Mills Ltd 2 Nd Floor Feltham House Ballard Estate J N Herdia Marg Mumbai 400001 Pan Gir No A A Bcs 7890 Q I T A No 5778 2924 Mum 2014 Assessment Year 2011 12 2010 11 M S Swan Energy Ltd Formerly Known As Swan Mills Ltd 2 Nd Floor Feltham House Ballard Estate J N Herdia Marg Mumbai 400001 Vs Acit Rg 7 2 Room No 626 M K Road Churchgate Mumbai 400020 Appellant By Sh J P Bairagazd Respondentby Ms Abha Kala Chanda Date Of Hearing 2 7 0 9 201 7 Date Of Pronouncement 06 12 2017 2 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd O R D E R Per Shri Sandeep Gosain Judicial Member The Se Four Cross A Ppe Al S Filed By The Revenue As Well As Assessee Are Against The Order Of Commissioner Of Income Tax Appeals 13 Mumbai Dated 14 08 14 And 20 03 2014 For Ay 2011 12 And Ay 2010 11 Respectively 2 Since All The Issues Involved In These Four Appeals Are Common Therefore They Have Been Clubbed Heard Together And A Consolidated Order Is Being Passed For The Sake Of Convenience And Brevity Ita No 6662 Mum 2014 Ay 20 11 12 3 First Of All We Take Up Revenue S Appeal In Ita No 6662 Mum 2014 For Assessment Year 2011 12 As Lead Case The Ground Of Appeal Are Mentioned Herein Below 1 Whether On Facts And Circumstances Of The Case The Learned Cit A Erred In Restricting The Disallowance Under Section 14 A Of The Income Tax Act 1961 To Rs 1 02 Cr Ignoring The Fact As Tha T Working Of Disallowance U S 14 A Read With Rule 8 D Is Mandatory 3 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd From A Y 2008 09 Onwards As Held By Honble B Ombay High Court In The Case Of Godrej Boycle 2 Whether On Facts And Circumstanc Es Of The Case The Ld Cit A Has Erred On The Facts And In Law In Holding That The Deduction Of Rs 4 1 Crore Pertaining To The Income Of Earlier Year Is Allowable In The Year Under Co Nsideration Without Appreciatin G The Fact That The Similar Dedu Ction Claimed In A Y 2004 05 Was Disallowed By Assessing O Fficer 3 Whether On Facts And Circumstances Of The Case The Ld Cit A Has Erred On The Fact And In Law In Restricting The Disallow Ance Of Rs 3 1 Cr Made By The Assessing Officer On Account Of Bogus Purchase To 6 5 Of Such Purchase Without Appreciating That The Purchase Made By The Assessee Was Unproved And Bogus 4 Whether On Facts And Circumstances Of The Case The Learned Cit A Has Erred On The Fact And In Law In Deleting The Disallowance Made Amounting To Rs 61 5 Lac Holding That Such Expenditure Is Nothing But Cost Of Improvement Allowable While Computing The Capital Gains Ignoring The Fact That As Per The Provisions Of Sec 55 Which Defines The Cost Of Improvement The 4 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Amount Paid As Interest On Compensation Paid Does Not Qualify As Cost Of Improvement 4 As Per The Facts Of The Present Case The Assessee Is Mainly Engaged In The Business Of Real Estate Development During The Year The Assessee Also Carried Out Business Activities In Trading Of Fabrics And Warehousing The Return Of Income Was Filed Declaring Total Income At Rs 65 54 84 767 And Order U S 143 3 Was Passed Thereby Assessing Total Income At Rs 74 44 22 180 5 Aggrieved By The Order Of Ao Assessee Preferred Appeal Before Ld Cit A And Ld Cit A After Considering The Case Of Both The Parties Partly All Owed The Appeal Of The Assessee Aggrieved By The O Rder Of Ld Cit A Both I E Revenue As Well As The Assessee Have Filed The Ir Respective Appeal S Before Us However At Present We Are Dealing With The Appeal Filed By The Revenue On The Ground S Mentioned Herein Above Ground No 1 6 This Ground Grounds Raised By The Revenue Relates To Challenging T He Order Of Ld Cit A In Restricting The 5 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Disallowance Under Section 14 A Of The Income Tax Act 1961 To Rs 1 02 Cr Ignoring The Fact As That Working Of Disallowance U S 14 A Read With Rule 8 D Is Mandatory From A Y 2008 09 Onwards As Held By Honble Bomb Ay High Court In The Case Of Godrej Boycle 7 We Have Heard Counsels For Both The Parties At Length And We Have Also Perused The Material Placed On Record As Well As The Orders Passed By Revenue Authorities Before We Decide The Merits Of The Case It Is Necessary To Evaluate The Orders Passed By Ld Cit A The Ld Cit A Has Dealt With The Above Grounds Raised By The Revenue In Its Detailed Order In Para No 3 3 1 To 3 6 The Operative Portion Of The Order Of Ld Cit A Is Contained In Para No 3 4 To 3 6 Of Its Order And The Same Is Reproduced Below 3 4 I Have Duly Considered The Facts And Submission In The Case It Is Undisputed That The A O Did Not Find Any Direct Nexus Of Expenses To Be Disallowed As Per Sub Section I Of Rule 8 D 2 And Has Made Disallowance Of Indirect Interest Expenses As Per The Formula Provided It Is Also Not The Case Of Ao That 6 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd There Are New Investments During The Year Out Of Borrowed Funds Available In During The Year On Thes E Identical Facts I E When Pending Permission Of Government Authorities The Blocked Fund Were Invested In Equity Mutual Funds And Interest Expenditure Was Attributable To The Business Activity And Not To The Investment Activity It Cannot Be Said That In Terest Expenditure Incurred Was Attributable To Investment Activity And Hence Disallowance Of The Same Is Not Sustainable 3 5 1 Have Also Gone Through The Decision Available In Appeal Number Cit A 13 It 18 13 14 For An 2009 10 As Well As For An 2010 1 1 For The Sake Of Clarity The Relevant Portions Of The Decision Given In The Appeal Number Cit A 13 It 18 13 1 4 For 2010 11 Dealing With The Issue Is Reproduced As Under 3 6 As The Appellant Have Agitated That Surplus Funds Were Available An D Hencehaving Not Debited Any Expenses In The Profit And Loss Account No Disallowance Should Be Made Under Section 14 A Of The It Act 1961 The Appellant Was Asked To Furnish A Fund Flow Statement On The Date Of Investments Made In The Equities On Which Di Vidend Have Been Earned During The Year In Order To Support The Plea Taken By Them That It Was Only Out And Out Of Surplus Funds Available With Them That Investments Have Been Made In The 7 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Equity On Which Dividends Have Been Earned The Appellant Has Candi Dly Admitted That No Such Fund Flow Can Be Made Available To Support Their Plea Though The Fact Remains That A Separate Account By The Name Escrow Accounthas Been Maintained By Them Where In Only Receipts On Account Of Sales Are Credited And Which Cannot Be Withdrawn But For The Permission Of Monitoring Committee Constituted In This Regard And It Is Also Undisputed That The Said Investments Are Made Out Of Funds Available In This Account Only In View Of This The Appellant Have Argued That There Is No Mix Ing Of Fund As Borrowed Funds Are Not Coming Into The Picture For Making Investment In The Equities On Which Exempt Income By Way Of Development Has Been Earned During The Year 3 7 In View Of This I Am Of The Opinion That Assessing Officer Has Wrongly Wo Rked Out Disallowance Under Section 14 A While Taking The View That Interest Paid On Borrowed Funds In Absence Of Any Such Bifurcations Of Surplus Funds Available On The Date Of Investment Made In Equity Fund Is Impliedly Linked With Earning Of Exempt Inc Ome And Hence Action Of Ao To Calculate Disallowance Under Section 14 A As Per Working Given In Order Is Not Acceptable In Principle 3 8 I Have Duly Considered This Submission And I Am Of The View That Even If No Portion Of Interest 8 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Debited In The Profit And Loss Account Is Found Directly Linked To The Investment Made In These Equities On Which Appellant Is Earning Dividend Income Is Still There Are Managerial And Administrative Expenses Which Cannot Be Ruled Out As Incurred For Earning The Exempt Income This View Is Supported By The Decision Given By Honourable Itat Ahmadabad In Case Of Income Tax Officer Vs Karnavati Petrochem Pvt Ltd In Lt A No 22281 Ahd 2012 Assessment Year 2008 09 Further It Was Decided So By Honourable Kolkata Bench Of It A T In Case Of Trade Apartment Ltd And By The Decision Of Honble Mumbai Tribunal In Case Of Morgan Stanley India Securities Pvt Ltd In View Of The Above 0 5 Of Average Investment Is Taken As The Disallowance U S 14 A 3 9 As The Appellant During The Pr Oceedings Have Submitted A Working Excluding The Interest Portion Of Disallowances Under Section 14 A An Amount Rs 28 63 140 I Have Gone Through The Same It Is Seen That 0 5 Of Average Investment An Amount Rs 57 26 28 000 Comes To An Amount Rs 2 8 63 140 For The Reasons Discussed Above Disallowances Under Section 14 A Are Restricted To Rs 28 63 140 The Ground Number 1 Taken In Appeal Is Partly Allowed 3 6 In View Of The Identical Facts In The Case I Am In Agreement With The Appellants Tha T At The Most 9 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Disallowance U S 14 A Read With Rule 8 D Can Only Be Made As 0 5 Of The Investments As Were Given Before The Ao Also The Appellant Have Alternatively Worked Out The Disallowances As Per Rule 8 D Where In Interest Expenses Have Not Been Take N Into Account And As Per The Same The Disallowances Comes To Rs 24 44 188 In View Of This The Disallowances U S 14 A Are Restricted To Rs 24 44 188 Against The Disallowances Made By The A 0 At Rs 1 02 54 780 The Ground Number 1 Is Partly Allo Wed After Having Gone Through The Facts Of The Present Case As Well As Considering The Orders Passed By Revenue Authoritie S And Submissions Made By Both The Parties We Find That Ld Cit A While Deciding The Said Ground Has Rightly Appreciated That Th E Ao Although Made Disallowance U S 14 A R W R 8 D Of Rs 1 02 54 780 But Did Not Find Any Direct Nexus Of Expenses To Be Disallowed As Per Sub Section I Of Rule 8 D 2 And Has Only Made Disallowance Of Indirect Interest Expenses As Per The Formula Provid Ed Ao Had Also Not Made Out A Ground That There Are New Investments During The Year Out Of Borrowed Funds Available The Ld Cit A While Relying Upon The Earlier Orders Of The Revenue 10 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd In Assessees Own Case For Ay 2009 10 And 2010 11 Had Categorically He Ld That Pending Permission Of Government Authorities The Blocked Funds Were Invested In Equity Mutual Funds And Interest Expenditure Was Attributable To The Business Activity And Not To The Investment Activity Therefore It Cannot Be Said That Interest E Xpenditure Incurred Was Attributable To Investment Activities The Ld Cit A Recorded Its Findings Based On Earlier Years Findings In Assessees Own Case And Restricted The Disallowance U S 14 A At Rs 24 44 188 Even The Honble Itat In Assessees Own C Ase In Ita No 2062 Mum 13 For Ay 2009 10 Had Dismissed Thi S Ground Raised By The Revenue Copy Of Order Placed On Page On 191 To 201 Of Paper Book N O New Facts Or Contrary Judgments Have Been Brought On Record Before Us I N Order To Controvert Or Rebut T He Findings So Recorded By Ld Cit A Therefore There Are No Reason S For Us To Interfere Into Or Deviate From The Findings Recorded By The Ld Cit A Hence We Are Of The Considered View That The Findings So Recorded By The Ld Cit A Are Judicious An D Are We Ll Reasoned Resultantly This Ground Raised By The Revenue Stands Dismissed 11 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Ground No 2 8 This Ground Grounds Raised By The Revenue Relates To Challenging The Order Of Ld Cit A Erred On The Facts And In Law In Holding That The Deduction Of Rs 4 1 Crore Pertaining To The Income Of Earlier Year Is Allowable In The Year Under Consideration Without Appreciating The Fact That The Similar Deduction Claimed In A Y 2004 05 Was Disal Lowed By Assessing Officer 9 We Have Heard Counsels For Both The Parties At Length And We Have Also Perused The Material Placed On Record As Well As The Orders Passed By Revenue Authorities Before We Decide The Merits Of The Case It Is Necessary To Evaluate The Orders Passed By Ld Cit A The Ld Cit A Has Dealt With The Above Grounds Raised By The Revenue In Its Detailed Order In Para No 4 4 1 To 4 5 The Operative Portion Of The Order Of Ld Cit A Is Contained In Para No 4 5 Of Its Order And The Same Is Reproduced Below 4 5 As The Issue Is Based On Identical Facts Which Were There In A Y 2009 10 And 2010 11 Except That During 12 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd The Year Appellant Have Claimed Deduction At The Rate O F 12 5 Of The Same Amount For The Reason That The Proportionate Land Has Been Transferred By Way Of Sewri Building During The Year Relevant To A Y 2011 12 The Subject Matter Of Instant Appeal The Issue I E Deduction Claimed On A C Of Reduction In Val Ue Of Stock In Trade For An Amount To Rs 4 10 12 500 Is Allowed The Ground Number 2 Is Allowed After Having Gone Through The Facts Of The Present Case As Well As Considering The Orders Passed By Revenue Authorities And Submissions Made By Both The P Arties We Find That Ld Cit A While Deciding The Said Ground Has Relied Upon T He Orders Passed In Assessees Own Case F Or Ay 2009 10 And Ay 2010 11 As The Issue Was Based On Identical Facts The Honble Itat In Assessees Own Case In Ita No 596 M 13 For Ay 2009 10 Had Decided This Ground In Favour Of Assessee Copy Of Order Placed At Page No 125 To 155 Of Paper Book N O New Facts Or Contrary Judgments Have Been Brought On Record Before Us I N Order To Controvert Or Rebut The Findings So Recorded By Ld C It A Therefore There Are No Reason S For Us To Interfere Into Or Deviate From The Findings Recorded By The Ld 13 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Cit A Hence We Are Of The Considered View That The Findings So Recorded By The Ld Cit A Are Judicious And Are We Ll Reasoned Resultantl Y This Ground Raised By The Revenue Stands Dismissed Ground No 3 10 This Ground Grounds Raised By The Revenue Relates To Challenging The Order Of Ld Cit A Erred On The Fact And In Law In Restricting The Disallowance Of Rs 3 1 Cr Made By The Assessing Officer On Account Of Bogus Purchase To 6 5 Of Such Purchase Without Appreciating That The Purchase Made By The Assessee Was Unproved And Bogus 11 We Have Heard Counsels For Both The Parties At Length And We Have Also Perused The Material Pla Ced On Record As Well As The Orders Passed By Revenue Authorities Before We Decide The Merits Of The Case It Is Necessary To Evaluate The Orders Passed By Ld Cit A The Ld Cit A Has Dealt With The Above Grounds Raised By The Revenue In Its Detailed Order In Para No 5 5 1 To 5 9 The Operative Portion Of The Order 14 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Of Ld Cit A Is Contained In Para No 5 8 5 9 Of Its Order And The Same Is Reproduced Below 5 81 T Is Noted That There Are Comparable Cases Of Traders I E Mtc Rolling Mills And Sansu I Steels P Ltd Whereas Thane Steels P Ltd Being A Manufacturer Is Not A Comparable Case It Is Seen That Difference In The Rates Are There However The Differences Are On Both The Sides Meaning Thereby They Are Higher In Some Cases Whereas In Other Case S There Are Lower Than The Rates Charged Apparently By Hari Om Traders And Krupa Trading Co In View Of This Fact That Rates Are Ranging Between 1 8 To 3 On An Average In Such Bills I Am Of The Considered View That 3 Of Such Bills At The Most Can Be Di Sallowed For The Reason That At The Most Appellant Have Been Benefit By Obtaining Bogus Bills Of Inflated To Reduce Profit By That Margin I E 3 On This Account 5 9 Then For The Reason That Though The Claim Of The Vat Though Not Made For Set Off But By Charging The Vat From Its Client The Appellant Is Getting The Benefit For The Amount Of Vat To Be Charged From Their Customers When The Fact Remains That No Vat Was Payable To These Parties And Hence Claimed For Vat 15 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Paid As Per These Bills Has To Be Disal Lowed The Rate Of Vat Being Charged From The Appellant In These Bills Is 4 Percent And Hence I Am Of The Considered View That The Appellant Have Actually Benefited Not Only By The Margin Of Inflating The Purchases But Also By The Vat Shown As Paid At 4 In These Bogus Bills As Their Claim For Vat Paid In Any Case Has To Be Disallowed Consequent To Findings Made On Enquiries Conducted By Sales Tax Authorities And Confession Made By These Two Parties Already That Is The Case Even If It Is Accepted That A Ctual Purchases Are From Grey Market In View Of This The Profit Percentages On These Bogus Purchases Have To Be Taken At 6 5 For The Reason That No Vat Had To Be Paid Accordingly On The Total Bogus Purchases Of Rs 3 15 18 844 6 5 I E An Amount Rs 20 48 725 Is Added Back In The Income Of The Appellant On This Account The Ground Number 3 Is Treated As Partly Allowed After Having Gone Through The Facts Of The Present Case As Well As Considering The Orders Passed By Revenue Authorities And Submissions Made By Both The Parties We Find That The Ao While Passing The Order Of Assessment Has Taken Into Consideration The Wid E Spread Investigations Carried By The Sales Tax Authorities 16 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Mumbai In The Case Of Bogus Entities Individuals Who Have Issued Bogus Bills To Various Parties And Resulting In Sales Tax Evasion After Considering The Entire Facts Ao Noted Down That No Ev Idence Was Found To Show That Actual Purchases Had Been Made By The Assessee From The Alleged Purchases I E M S Hariom Traders And Krupa Trading Company The Ao Has Mentioned The Detailed Reasons In His Order Of Assessment To Point Out That No Lorry Recei Pts Transportation Bills Delivery Challans Were Produced Found Which Could Support The Contention That Actual Material Had Been Received Apart From Above No Specific Entries In The Stock Register Books Of Account Were Shown Which Reflected The Receipt Of Goods The Ao Had Also Sought Information From The Assessee By Issuing A Written Notice And After Appreciating The Evidences Gathered By The Sa Les Tax Authorities Dgit Inv And Taking Into Consideration That Nothing Was Produced By The Assessee Either In The Course Of Survey Or During The Course Of Assessment Proceedings That Actual Delivery Had Taken Place Reached To The Conclusion That Purchases From The Said Dealers Are Non Genuine 17 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Ld Cit A Although Passed A Detailed Order But Had Rightly Concl Uded In Para No 5 5 That The Bills Produced By The Assessee Are Undoubtedly Bogus Bills But Restricted The Additions 6 5 Of Bogus Purchases The Ld Cit A While Doing So Has Taken Into Consideration The Details Of Rates For The Identical Commoditie S The Details Of Which Are Mentioned In Para No 5 7 Of Its Order However No Comments Or Verification Were Sought From The Ao In Respect Of The Said Details As Reflected In The Order Of Ld Cit A Therefore Reducing The Restriction On The Above Basis Is Not Sustainable After Considering The Facts And Circumstances Of The Present Case We Are Also Of The View That O Nly Because The Amount Has Been Routed Through Banking Channel Would Not Establish The Genuineness Of The Transaction As Held By Honble Jur Isidictional High Court In The Case Of Naresh K Pahuja 2015 54 Taxmann Com 25 8 Therefore Co Nsi Dering The Peculiar Facts And Circumstances Of The Present Case And While Relying Upon The Following Judgments 1 Clt Vs Bholanath Poly Fab Ltd 20 13 355 Itr 290 Guj Hc 2 Cit V Simit D Sheth 18 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd 2013 356 Itr 451 Guj Hc And 3 Cit Vs Sanjay Oil Cake Indust Ries 2009 316 Itr 274 Guj 1 C And Taking Into Consideration The Facts Of The Present Case And To Account For The Profit Element Embedded In These Purchase Transactions To Factorize Profit Earned By Assessee Against Purchase Of Material In The Grey Market We Are Of The Considered View That Restricting The Additions 6 5 Of Purchases By Ld Cit A Is Unreasonable The Ends Of Justice Would Be Met In Case The Additions Are Restricted 10 Of Bogus Purchases Consequently Orders Passed By Ld Cit A Are Set Aside T He Issue Of Accommodation Entries Is A Reality To Arrest Such Rampant Malpractices A Restraint Is Always Inevitable As We Cannot Encourage Such Malpractice Of Obtaining Accommodation Entries To Avoid The Impact O F Levies And Defrauding Revenue In The Pr Esent Case As The Ao Was In Possession Of Certain Valid Information In The Form Of Oath Statement Therefore In Such Circumstances We Can Find Such A Restraint Advice By The Honble Gujrat High Court In The Case Of Smith P Sheth Supra Without Which Av Oiding Payment Of Levies And Defrauding Revenue Will Continue Unabated Since It Is Proved On Record That Assessee Was 19 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Indulged In Bogus Purchases Therefore The Assessee Is Not Being Given Benefit To Reduce Already Gp Declared Hence No Benefit Of Gp Is B Eing Given Hence We Direct The Ao To Restrict The Additions To The Extent Of 10 Of The Bogus Purchases For Over And Above The Regular Profits Disclosed By The Assessee Accordingly This Ground Raised By The Revenue Is Partly Allowed Ground No 4 12 This Ground Grounds Raised By The Revenue Relates To Challenging The Order Of Ld Cit A Erred On The Fact And In Law In Deleting The Disallowance Made Amounting To Rs 61 5 Lac Holding That Such Expenditure Is Nothing But Cost Of Improvement Allowable Wh Ile Computing The Capital Gains Ignoring The Fact That As Per The Provisions Of Sec 55 Which Defines The Cost Of Improvement The Amount Paid As Interest On Compensation Paid Does Not Qualify As Cost Of Improvement 20 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd 13 We Have Heard Counsels For Both Th E Parties At Length And We Have Also Perused The Material Placed On Record As Well As The Orders Passed By Revenue Authorities Before We Decide The Merits Of The Case It Is Necessary To Evaluate The Orders Passed By Ld Cit A The Ld Cit A Has Dealt With The Above Grounds Raised By The Revenue In Its Detailed Order In Para No 6 6 1 To 6 4 The Operative Portion Of The Order Of Ld Cit A Is Contained In Para No 6 2 To 6 4 Of Its Order And The Same Is Reproduced Below 6 2 As The Appellant Have Relied Upon The Decision Given In Their Appeal Number 201 11 12 For An 2009 10 Wherein The Issue Was Decided I Have Gone Through The Same The Relevant Portions Are Reproduced As Under It Was Also An Admitted Fact That Without R Elinquishment Of Development Rights By M S Tropicana Properties Ltd The Appellant Could Not Have Developed The Said Land In The Facts And Circumstances The Interest Component Paid To M S Tropicana Pertaining To This Land Was Forming Part Of Cost Of I Mprovement Of The Said Land On This Issue The Appellant Has Relied On The Following Decisions 21 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd I Cit Vs K Rajagopala Rao 252 Itr 459 Mad Ii Cit Vs Mithleshkumari 921 Tr 9 Del Iii Cit Vs Sri Hari Ram Hotels P Ltd 229 Ctr 455 Karnataka Iv A Cit Vs C Rama Brahmam 27 Taxman Com 104 Chennai Trib Besides Above Decisions The Issue Of Cost Of Improvement Has Been Discussed In The Following Decisions I Cit Vs Eagle Theatres 2012 205 Taxman 449 Del Ii Mrs June Perret Vs Ito 298 Itr 268 Karnataka Iii Cit Vs Ms Piroja C Patel 242 Itr 582 Bom Iv Cit Vs V Ramaswamymudaliar 196 Itr 939 Mad V Cit Vs Venkat Raman 137 Itr 846 Mad Vi Mathuradas Mangaldas Parekh Vs Cit 126 Itr 669 Guj Vii Acit Vs Gd Th Irani 70 Ltd 148 Calcutta Trib In The Above Decisions It Has Been Held That The Amount Paid For Vacating The Property Payment To Evict Unauthorised Occupants Of The Property Payment To Hutment Dwellers Payment Made Tenants In Occupation Of The Pr Operty And Any Payment Made To Protect And Maintain The To Possess The Property Adds To The Cost Of Improvement Of The Property It Was Also Held That The Word Improvement Include Everything Resulting In The Enhancement In The Value Of Asset Or Its Price Or Resulting In Its Betterment 22 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd In The Case Under Consideration The Interest Expenditure Pertaining To Compensation Paid For The Land For Relinquishment Of Development Rights By M S Tropicana Properties Ltd Ultimately Resulted In Enhancement Of Value Of The Property I E Land And The Development Rights Of The Said Land Became Available To The Appellant By Incurring Such Expenses The Appellant Could Obtain Clear Title Lien Of The Land And Such Land Was Subsequently Sold At A Higher Price Thus The Exp Enditure Was Nothing But Cost Of Improvement Allowable While Computing The Capital Gains The Assessing Officer Is Directed To Allow Such Expenditure Under The Head Capital Gains 6 3 Following The Same The Identical Issue Was Decided In Appeal No 18 13 14 For An 2010 11 Whose Relevant Portions Are Reproduced As Under 6 2 The Appellant Has Also Submitted That In The Appeal Filed For Assessment Year 2009 10 The Said Claim Was Allowed By C Lt A I Have Gone Through The Assessment Order And Also Th E Appellate Order The Undisputed Facts In The Case Is That Appellant Was Having An Agreement With Tropicana Properties Ltd To Consume Utilised 60 Fsi Who In Turn Agreed To Pay The Appellant Consideration Of Rs 2300 Per Square Feet And An 23 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Amount Of Rs 2 50 00 000 Was Paid On The Execution Of Agreement And Balance Amount Was To Be Paid The Appellant Then Availed Loan From Peerless Gen Finance And Investment Co Ltd And To Repay The Bridge Loan It Executed A Deed Of 2 Ssignment However Could Not Pay T He Amount Back To Peerless Who In Turn Filed A Suit And Then In The Settlement Of The Claim The Appellant Assigned Peerless The Balance Receivable From Tropicana By Another Consent Term Accordingly An Amount Including Rs 11 14 00 000 Inclusive Of Refun D Of Rs 3 00 00 000 Was Paid By Tropicana To Appellant Under The Said Agreement The Appellant Company Cancelled The Development Agreement And Then Tropicana Properties Took Out The Execution Proceedings And Attached The Properties Of Appellant Company In View Of This Appellant Company Entered Consent Term And Paid Interest At The Rate Of 21 To Settle The Claim This Amount Of Rs 8 14 Lakh Was Debited In The Profit And Loss Account In The Year 2000 01 And Was Claimed As Cost Of Improvement Same Was Disallowed By The Appellant And Assessing Officer Rs 2 67 42 241 Concluding That Same Does Not Form Cost Of Improvement 24 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd 6 3 Now During Appellate Proceeding Appellant Has Submitted As Mentioned Above While Relying Upon Decision Given In Their Own Cas E In Assessment Year 2009 10 In View Of This I Have Gone Through Appellate Order Given In Their Case In Appeal Number 201 2011 12 And Noted That The Same Was Allowed While Discussing The Issue As Under In Para 6 3 Of The Said Appellate Order As Repro Duced Above In Appellants Submission 6 4 After Going Through The Same When The Facts Remain Undisputed That Same Was Made To Settle The Claim To Clear The Title Of The Said Land I Am In Agreement With Appellant On The Issue That The Claim Made As Cost Of Improvement Is Admissible Under Section 55 Accordingly The Ground Number 4 Is Allowed 6 4 During The Year In Appeal The Appellant Have Claimed An Amount Rs 16 51 293 On Account Of Cost Of Improvement As The Basic Facts Are Identical And It Is Only The Proportionate Amount Of The Interest Of Rs 1 17 Crores One Fourth Of Rs 4 69 Crores Which Is 50 Of This 1 17 Crores I E An Amount Rs 61 51 293 Which Has Been Claimed The Issue Is Decided In Favour Of Appellant Being On The Same Lines Acc Ordingly The Ground Number 4 Is Allowed 25 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd After Having Gone Through The Facts Of The Present Case As Well As Considering The Orders Passed By Revenue Authorities And Submissions Made By Both The Parties We Find That Ld Cit A While Deciding The Said Gro Und Has Relied Upon The Orders Passed By The Revenue In Assessees Own Case F Or Ay 2009 10 And Ay 2010 11 As The Issue Was Based On Identical Facts Even Honble Itat In Ita No 2062 M 13 For Ay 2009 10 Has Decided This Ground In Favour Of The Assessee By Dismissing The Ground Raised By The Revenue Copy Of Order Placed At Page 191 To 201 Of Paper Book N O New Facts Or Contrary Judgments Have Been Brought On Record Before Us I N Order To Controvert Or Rebut The Findings So Recorded By Ld Cit A Therefore There Are No Reason S For Us To Interfere Into Or Deviate From The Findings Recorded By The Ld Cit A Hence We Are Of The Considered View That The Findings So Recorded By The Ld Cit A Are Judicious And Are We Ll Reasoned Resultantly This Ground Rai Sed By The Revenue Stands Dismissed 26 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd In The Net Result The Appeal Filed By The Revenue Is Partly Allowed Ita No 5778 2924 M 2014 For Ay 2011 12 2010 11 Respectively Filed By Assessee 14 Since We Have Already De Cided The Appeal Of Ita No 6662 Mum 2014 For The Ay 2011 12 On Merits And The Grounds Rai Sed In The Present Appeal Are Identical To That Of Appeal No 6662 M 14 Therefore Following Our Own Decision In Ita No 6662 M 14 We Apply The Same Findings In The Present Appeal In Order To M Aintain Judicial Consistency Which Is Applicable Mutatis Mut Andis In The Case Of The Assessee Resultantly Both The Appeals Filed By The Assessee Stands Dismissed Ita No 3870 M 2014 For Ay 2010 11 Filed By Revenue 15 Since We Have Already De Cide D The Appeal Of Ita No 6662 Mum 2014 For The Ay 2011 12 On Merits And The Grounds Raised In The Present Appeal Are Si Milar To That Of Appeal No 6662 M 14 Therefore Following Our Own Decision In Ita No 6662 M 14 We Apply The Same Findings In The Present Appeal In 27 Ita No 6662 3870 5778 2924 Mum 2014 M S Swan Energy Ltd Order To Maintain Judicial Consistency Which Is Applicable Mutatis Mut Andis In The Case Of The Assessee Resultantly This Appeal Filed By The Revenue Is Partly Allowed 16 In The Net Result Both T He Appeals Filed By The Revenue Are Partly Allowed And Both The Appeals Filed By The Assessee Stands Dismissed Order Pronounced In The Open Court On 6 Th Dec 2017 Sd Sd Rajendra Sandeep Gosain Accountant Member Judicial Member Mumbai Dated 06 12 201 7 Sr Ps Dhananjay Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit Concerned 5 Dr Itat Mumbai 6 Guard F I Le By Order Dy Asstt Registrar Itat Mumbai