TMI Blog2016 (7) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... missible act. In these circumstances, we are of the view that the action of the ld. CIT(A) in directing the AO to allow the deduction of the said expenses is on right footing and do not call for any interference. Expenditure in respect of approvals and permissions, it is seen that the ITAT in assessee s own case for AY 2006-07 - CIT(A) has rightly looked into the matter and has after considering the expenses which have been incurred subsequent to the claim, has granted the proportionate relief to the assessee. In these circumstances, we are of the view that the proportionate expenses as allowed to the assessee, is on a scientific and an acceptable principle after considering the expenses claimed and the possible future liability and consequently no interference is called for. Notional disallowance made by the AO in respect of loan given to DCM Employees Welfare Trust - Similar disallowance had been made by the AO in earlier years and was subsequently deleted by CIT (A) and ITAT. Accordingly, this ground is covered in favour of the assessee. Disallowance u/s 14A - assessee company had received dividend income during the year which was claimed as exempt u/s 10(34) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , original return of income was filed declaring Nil income after adjusting brought forward losses against current business profits of ₹ 897,15,493/-. Subsequent to the issuance of notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter called the Act ) on 27/08/2011, the assessee filed the revised return of income on 26/03/2012 declaring Nil income after adjusting brought forward losses against current year business profit of ₹ 922,87,570/-. During the assessment proceedings, the assessee company again filed a revised computation of income on 22/02/2013 declaring Nil income after set off of brought forward loss of ₹ 134,445,528/-. The business income for the year was computed at ₹ 19,46,10,951/-. The assessment was finalized at Nil income after setting off from unabsorbed losses of earlier year. Total income u/s 115JB was computed at ₹ 60,01,90,619/- after making an addition of ₹ 143,39,000/- on the returned book profit of ₹ 58,58,51,619/-. 3. A perusal of the assessment order shows that during assessment year 2004- 05, the assessee company had claimed deduction for all the balance accrued liability relating to real estate project, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees Welfare Trust. 5. Further aggrieved, the assessee has preferred an appeal before the ITAT and has raised the following grounds of appeal: 1. That the CIT(A) erred in disallowing alternate claim made by the appellant on actual payment basis in respect of following items of expenses incurred in relation to real estate project without appreciating that claim had been made by the appellant for the reason that department has not accepted allowability of expenses on accrual basis and appeals in respect thereof are pending for adjudication before Delhi High Court. a) Flyover Cost paid to MCD ₹ 3,02,50,000/- b) Flyover Interest paid to MCD ₹ 52,25,500/- c) Expenditure in respect of approvals and permissions ₹ 81,19,423/- 2. That the CIT(A) erred in disallowing an amount of ₹ 12.47 lacs on account of administrative expenses u/s 14A of the Income Tax Act as against disallowance made by the appellant company of ₹ 2.50 lacs in its return of income. 3. That the CIT(A) erred in upholding addition on account of disallowance u/s 14A read with Rule 8D of ₹ 9.97 lacs in determination of book profit for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed on accrual basis in AY 2004- 05 and thereafter and, therefore, the alternate ground raised on actual payment basis was disallowed by the Ld. CIT(A) and also upheld by the ITAT. He drew attention to pages 51 to 54 of the Paper Book which contains the order of the ITAT for AY 2005-06, pages 60 to 61 for AY 2006-07, pages 66 to 73 for AY 2007-08 and pages 81 to 86 for AY 2009-10. The Ld. AR submitted that the issue was now before the Hon ble Delhi High Court pending adjudication because the Department has preferred an appeal against the order of the ITAT. On ground no. 2 of the asessee s appeal, the Ld. AR submitted that the assessee had suo moto made a total disallowance of ₹ 21.87 lacs consisting of ₹ 19.37 lacs on account of interest expenses and ₹ 2.50 lacs on account of administrative expenses as against exempt income of ₹ 70,088/-. The Ld. AR submitted that in AY 2009-10 the Ld. CIT (A) had deleted a similar disallowance. The Ld. AR also submitted that the assessee company has raised an additional ground to the affect that since the total exempt income was ₹ 70,088/-, disallowance is to be restricted to this amount only notwithstanding the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was disallowed by the AO as well as CIT (A) and ITAT for the reason that this claim had already been allowed on accrual basis in AY 2004-05. Similarly, this ground is also an alternate claim on account of expenditure actually incurred for obtaining permissions/approvals in respect of real estate project. Claim on accrual basis has already been allowed by the CIT (A) in AY 2004-05. On an overall view of the factual matrix of the case it is our considered opinion that following the principle of consistency, it would serve the ends of justice if the ITAT s order in AY 2004-05 is as we are informed that the issue in AY 2004-05 is still pending adjudication. The relevant paragraph of ITAT in assessee s own case for AY 2004-05 in ITA No. 2799/Del/2008 reads as under: 5. We have considered the rival submissions. In regard to the issue of disallowance of ₹ 12.21 crores being the expenses which had been disallowed by the AO as also the issue of disallowance of flyover cost of ₹ 13.50 crores and the issue of interest payable to MCD in respect of outstanding flyover cost, it is noticed that for the AY 1993- 94 to 1996-97 the Revenue has included the income on the sale of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the orders of the Tribunal in the preceding assessment years in the assessee s own case. Accordingly, ground no.1 of the assessee s appeal is dismissed. 14. Ground no. 1 of the Department s appeal relates to notional disallowance made by the AO in respect of loan given to DCM Employees Welfare Trust. Similar disallowance had been made by the AO in earlier years and was subsequently deleted by CIT (A) and ITAT. Accordingly, this ground is covered in favour of the assessee. We find that ITAT in assessee s own case for AY 2006- 07 in ITA No. 314/Del/2010 had adjudicated the matter as under: 2.2 In regard to notional interest, the finding of the Tribunal has been as under: In regard to the issue of disallowance of interest on the loans outstanding from Ms/ DCM Employees Welfare Trust, it is noticed that the issue is squarely covered by the decision of the Coordinate Bench of this Tribunal in the assessee s own case for the AY 2003-04 referred to supra and consequently respectfully following the decision of the Coordinate Bench of this Tribunal in the assessee s own case for the AY 2003-04, the findings of the Ld. CIT (A) on this issue stand upheld. Accordingly, this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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