TMI Blog2020 (8) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of the Ld. DR for the Revenue, we find that the interest expenditure of ₹ 18.64 Crores is business expenditure and the same needs to be allowed as expenditure in the hands of the assessee, hence, we hold so. The grounds of appeal raised by the assessee in this year are thus allowed. Facts and issues raised in appeal of the assessee relating to Assessment Year 2008-09 are similar to the facts and issues in Assessment Year 2007-08 and our decision in Assessment Year 2007-08 shall apply mutatis mutandis. The interest expenditure in the respective year which has been capitalized by the assessee and not claimed as business expenditure, hence, the only portion claimed in the hands of the assessee is to be allowed as business expenditure. Accordingly, grounds of appeal raised by the assessee stands allowed. - ITA No.5057/Del/2010, ITA No.1651/Del/2016, ITA No.4340/Del/2014 - - - Dated:- 18-8-2020 - Ms. Sushma Chowla, VP And Shri N.K. Billaiya, AM For the Appellant : Sh. Saras Kumar, Sr.DR For the Respondent : Sh. Rohit Jain, Adv. And Sh. Deepesh Jain, CA ORDER PER SUSHMA CHOWLA,VP The present three appeals filed by assessee and the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating the interest earnings of ₹ 81,75,460- (₹ 6,58,863/- for bank interest ₹ 75,16,597/- for interest from loans advances given to various persons corporate bodies) as income earned from investment of surplus funds. 5. That the Commissioner of Income Tax (Appeals)-VII, New Delhi has grossly erred on facts and in the circumstances of the case and in Jaw in refraining from allowing set off of interest income against interest expenditure on alternative basis especially when amounts advanced and those parked with the bonk represented borrowed funds and not surplus funds of the appellant company. 6. That the Commissioner of Income Tax (Appeals)-VII, New Delhi has grossly erred on facts and in the circumstances of the case in deviating from the point of reasoning given by the AO and further therefore erred in not adjudicating key issue in relation to the point of commencement of business operations of the appellant company. 4. The ground of appeal no. 1 raised by the assessee in Assessment Year 2007-08 is against the order of authorities below in holding that the interest expenditure of ₹ 59,43,36,188/- on loans taken for purchase of stock i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income and all other expenses i.e. administrative and other expenses were also not allowed in the hands of the assessee being pre-operative expenses. The Ld. CIT(A) has upheld the order of the Assessing Officer, against which the assessee is in appeal before us. 10. The Ld. AR for the assessee pointed out that the issues raised in the present appeal are similar to the issues raised in Assessment Year 2006-07. He further pointed out that the Tribunal in ITA No.1408/Del/2011, relating to Assessment Year 2006-07 vide order dated 22.06.2020 has already adjudicated the aforesaid issues and held that the assessee had commenced its business in Assessment Year 2006-07 and had also directed the assessability of interest income as business income and allowed set off of interest expenditure against the same. Further, the balance expenditure i.e. administrative and other expenses were also allowed as business expenditure in the hands of the assessee. The Ld. AR for the assessee further drew our attention to the written submissions and pointed out that during the year under consideration, part of the interest expenditure i.e. 40.78 crores which relates to the Sonepat township project, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, we hold that in the case of the assessee where substantial activities were carried out by the assessee, since the date of incorporation which had culminated in raising loans, making investment in purchase of land, which was reflected as stock in trade and also advancing loans to associate concerns for purchasing different pieces of land, in order to fulfil the condition of Land Bank of 100 Acres or more, to develop the township in Haryana and where the assessee is entered into development agreement at the close of the present year/beginning of the next year, then assessee can be said to have set up and commenced its business. Further, the assessee having also invested substantial amount in the purchase of another property in the year itself, thus, set up of its business as per its Memorandum of Understanding was done, since it was engaged in the business of real estate. It is held that there is no merit in the order of the authorities below in this regard and the same are reversed. Accordingly, we hold that the assessee having not only set up its business but had also commenced its business during the previous year itself. Hence, ground no.1 of the assessee is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, hence, we hold so. The grounds of appeal raised by the assessee in this year are thus allowed. 18. The facts and issues raised in appeal of the assessee relating to Assessment Year 2008-09 are similar to the facts and issues in Assessment Year 2007-08 and our decision in Assessment Year 2007-08 shall apply mutatis mutandis. The interest expenditure in the respective year which has been capitalized by the assessee and not claimed as business expenditure, hence, the only portion claimed in the hands of the assessee is to be allowed as business expenditure. Accordingly, grounds of appeal raised by the assessee stands allowed. 19. The Revenue in Assessment Year 2009-10 has raised the following grounds of appeal:- 1. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) erred in treating the interest income of ₹ 9,95,52,864/- under the head Income from business of profession ? 2. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) erred in allowing to set off the interest expenditure of ₹ 7,07,12,753/- and ₹ 17,18,2411- being proportionate salary/wages expenditure against the interest income of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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