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TMI Blog2020 (6) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... and Ld. CIT(A), after considering the submission of the assessee, deleted the disallowance made by AO and partly allowed the appeal of the assessee with the following observations:- 1.4.2 The appellant company paid Rs. 1700 crores on 10.10.2007 to Unitech Ltd and land measuring 49.16 acres was agreed at Rs. 692.04 Crores and on the balance amount, interest was negotiated between the assessee and Unitech and was finally settled at 18.5% from 06.04.2004 onwards. The appellant has considered interest @ 18.5% amounting to Rs. 159,39,46,798/-(159.39 crores) from 06.04.2008 to 31.03.2009 as income and was offered to tax for AY 2009-10. The interest is part of 'other income' of P & L account for the year ended 31.03.2009(Paper Book Page 163) as per Schedule 13 ( Paper Book Page 164) and the breakup is given at Paper Book Page 165 which shows interest from Unitech Ltd. at Rs. 1,593,946,798/-. The computation of total income for AY 2009-10 is at Paper Book 166 which start from Net Profit as per P & L account (before tax) and after adjustments, total income is declared at Rs. 1,621,384,330/- in the return of income,the copy of which is at Page 167 of the Paper Book. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce certificate and in case of failure, it will be charged penalty interest. It is worth to notice that assessee has entered into second MOU on the backdrop of failure on the part of the other party to possess due diligence report and assessee proposed to acquire land in which due diligence report has to be clear. Since there is failure on the part of Unitec, accordingly, the terms were re-negotiated and from the date of second MOU, assessee has claimed the penalty interest @ 18.5%. Even though as per the findings of AO, the current market rate only 12% and the assessee has claimed 18.5%, therefore this transaction is genuine and assessee has earned the interest income diligently in the next assessment year as per the renegotiation with the parties. The assessee cannot take any interest income without ensuring the reasonableness and certainty of receipt of above interest. Therefore, these transactions entered by the assessee are genuine and reasonable. 7. Considered the rival submissions and material placed on record, we notice from the record that the assessee entered into agreement with M/s Unitec to acquire 49.16 acres of land and accordingly paid Rs. 1700 crores on 10.10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the findings of Ld. CIT(A). 9. With regard to case law relied by Ld DR, in Elmer Havell Electrics (supra), the assessee in this case had borrowed interest bearing loans from Market and same time, it advanced interest free loan to its sister concern. In the given case, the funds were advanced for purchase of land and not financed interest free. Therefore, it is not financial transaction and distinguishable on facts. With regard to case Rajasthan Art Emporium (supra), the payment related its sister concern on account of receipt of services and it is disallowed due to failure on the part of the assessee to prove the receipt of services even though there existed an agreement. In the given case, the payment was relating to purchase of land and it is not proved by AO that the lands were not belongs to Unitec group and the Unitec has not carried out any due diligence as per MOU. The AO doubted the utilization of the funds by Unitec and had no opportunity to doubt the existence of ownership of land and process of due diligence. Therefore, the facts are distinguishable to the present case. Accordingly rejected for consideration. 10. In the net result, the appeal filed by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the ruled so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary"period. 10.In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a ti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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