TMI Blog2022 (3) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... legality or perversity in the findings returned by the Ld. CIT(A) hence Ground No.1 Claim of business loss on account of depreciation and amortization of amalgamation expenses which was capitalized to work in progress - CIT(A) has allowed the business loss claimed by the assessee on account of depreciation and amortization of amalgamation expenses, which was capitalized to work in progress as the assessee was having only one contract - HELD THAT: When this issue has already been decided in favour of the assessee by the Tribunal in an appeal filed against the assessment order passed under section 143(3) of the Act, the same was liable to be decided in favour of the assessee when again disallowed during the assessment framed under section 153C read with section 143(3) - when the assessee has been consistently following the particular accounting method, business loss claimed by the assessee on account of depreciation and amortization of amalgamation expenses is liable to be allowed. A particular accounting method consistently being followed by the assessee cannot be disturbed by the AO in treating the impugned expenses as part of work in progress and as such when the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), was correct in allowing the business loss of ₹ 1,38,38,226/- claimed on account of depreciation, which was capitalized to work-in-progress because the assessee had only one contract and therefore, entire expenses including depreciation were liable to be capitalized as work in progress. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), erred in directing the assessing officer to treat the interest income of ₹ 47,61,041/-, being interest earned on fixed deposits as 'Business Income ' instead of 'Income from Other Sources . 3. Briefly stated facts necessary for adjudication of the controversy at hand are :the assessee company is into the business of construction and development of Special Economic Zone (SEZ) and during the year under consideration assessee company was engaged in constructing SEZ at Panvel, Maharashtra. During the scrutiny proceedings the Assessing Officer (for short the AO ) noticed that the assessee has earned income from fixed deposits to the tune of ₹ 8,36,30,107/-, ₹ 7,44,58,749/- ₹ 47,61,041/- in A.Y. 2008-09, 2009-10 2013-14 respectively. 4. Declining the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO contained in the assessment order and the other materials on record on this issue. The Ground no. 2 deals with treatment of interest income earned on fixed deposits of ₹ 8,36,30,107/- under the head other sources as against under the head business shown by the assessee. The assessee has argued that since no new facts have been brought on record, nor has been found during the course of search, no different view could have been taken by the AO in proceedings u/s 153C towards this income being business income. 11.1 I have considered the facts of the case. The issue involved is treatment of interest income from fixed deposits. While the assessee has treated it as income from business, the AO treated the same under the head 'Other Sources'. It is seen that an identical issue has been decided by my Ld. Predecessor in the case of M/s. Hiranandani Palace Gardens Pvt. Ltd., vide order dated 21.03.2016 wherein he directed to delete the addition by observing as under:- I find that the impugned receipts of ₹ 6,94,26,906/- cannot be treated as receipts that flow to the appellant de hors the business as they are directly and explicitly linked to the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvances on the booking of flats related to the project of the assessee is assessable as business income. The A.O. is accordingly directed to assess the same as business income. This ground of appeal is also allowed. 11.3 Further decision have also been examined by the undersigned in case of M/s. Hiranandani Palace Gardens Pvt. Ltd. for A.Y. 2008-09 wherein following Hon'ble ITAT findings in case of this assessee the claim of the assessee for interest income being business income was allowed by observing as under:- 11.1 I have considered the facts of the case. It appears that in the original assessment u/s 143(3) the then AO had made disallowance of business interest income earned on fixed deposits of ₹ 1,65,18,814/-. It further appears that the same has been reproduced by the.AO in the order u/s 153C dated 28.03.2016 in nature of interest income earned on fixed deposits which is the subject matter of this appeal. It further appears that the order of the Ld. CIT(A) dated 21.03.2016 deleting the said addition and the order of the Hon'ble ITAT dated 12.07.2019, confirming the order of the CIT(A) were not there before the AO at the time of passing the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed principle of law that in cases where assessee is engaged in development of properties, advances taken by it from customer to purchase the flats was deposited with the banks in the course of business, the interest income earned there from is to be treated as business income and not as income from other sources . So in these circumstances, we find no illegality or perversity in the findings returned by the Ld. CIT(A) hence Ground No.1 of ITA No.1545/M/2021 for A.Y. 2008-09, Ground No.2 of ITA No.1544/17 for A.Y. 2009-10 and Ground No.2 of ITA No.1543 for A.Y 2013-14 are determined against the Revenue. Ground No.1 of ITA No.1544/M/2021 for A.Y. 2009-10 Ground No.1 of ITA No.1543/M/2021 for A.Y. 2013-14 11. Assessee s claim of business loss on account of depreciation and amortization of amalgamation expenses which was capitalized to work in progress has been disallowed by the AO, however, the Ld. CIT(A) has allowed the business loss claimed by the assessee on account of depreciation and amortization of amalgamation expenses, which was capitalized to work in progress as the assessee was having only one contract by returning the following findings: 8.0 I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the expenses as have been claimed by the assessee. The consequential effect shall also be given by the AO while passing order giving appeal effect for the amount of closing WIP of the year under consideration as well as opening WIP of the immediately subsequent assessment year. Thus, with these directions, the grounds 1 to 3 raised by the assessee are allowed. 8.1 In the search and seizure action no incriminating material as such has been found against the assessee on this issue. It is a settled legal position that already concluded position will not be disturbed in the proceedings u/s 153C unless and until there is some incriminating material has been found. Accordingly this ground of .appeal is allowed. 8.2 Consequently the ground no. 1 taken by the assessee is allowed. 12. We have perused the findings returned by the Ld. CIT(A), the relevant portion of which is extracted as above. Again the Ld. CIT(A) has decided this issue in favour of the assessee by following the order passed by the co-ordinate Bench of the Tribunal in assessee s own case dated 11.01.2017 by deciding this issue in an assessment framed under section 143(3) of the Act. 13. When this is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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