DCIT Vs Prithvi Realtors and Hotels Private Limited (ITAT Mumbai)
Core Issue:- Whether interest payable on overdraft facility from Punjab and Maharashtra Co-operative Bank, which remained unpaid till the due date of return, is disallowable u/s 43B for AY 2017-18, particularly where the co-operative bank was included in the Second Schedule of the RBI Act, thereby qualifying as a Scheduled Bank.
Facts of the Case:- The assessee company engaged in real estate development had availed an overdraft facility from Punjab and Maharashtra Co-operative Bank and incurred interest expenditure of Rs. 14.29 crore during AY 2017-18.
The interest liability was not paid before the due date of filing the return under section 139(1). The Assessing Officer held that the unpaid interest was disallowable u/s 43B(e) and accordingly reduced the work-in-progress (WIP) by Rs. 14.29 crore.
The assessee contended that: Interest payable to co-operative banks came within section 43B only from AY 2018-19 (Finance Act 2017).
Therefore, section 43B was not applicable for AY 2017-18.
The interest was capitalized to WIP and not claimed as revenue expenditure.
The issue was covered by earlier ITAT decisions.
The CIT(A) accepted the assessee’s arguments and deleted the disallowance.
The Revenue filed an appeal before the Tribunal.
