DCIT Vs Macrotech Developer Ltd (ITAT Mumbai)
ITAT concur with the view taken by the CIT(A) that as the assessee had own funds which were far more than the investments in OPCD, therefore, the presumption would be that the investments were made from own funds and no disallowance of any part of interest expenditure claimed by the assessee u/s 36(1)(iii) was called for in the hands of the assessee. Our aforesaid view is fortified by the judgments of the Hon’ble High Court of Bombay in the case of CIT vs. Reliance Utilities, 313 ITR 340 (Bom) and CIT-2, Mumbai Vs. HDFC Bank Ltd., 366 ITR 505 (Bom).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The captioned appeal filed by the revenue is directed against the order passed by the CIT(A)-49, Mumbai, which in turn arises from the order passed by the A.O u/s 143(3) of the Income-tax Act, 1961 (for short „Act‟) dated 29.12.2017 for A.Y 2015-16. The revenue has assailed the order of the CIT(A) on the following effective grounds before us :
“1. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 5,26,52,120/- made by the assessing officer u/s 36(1)(iii) of the I.T Act.
2. Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,02,86,452/- towards sales promotion expense and Rs. 6,68,13,114/- on account of Advertisement expenses made by the Assessing Officer by capitalizing the same to the work-in-progress.”
2. Briefly stated, the assessee company that was merged with M/s Lodha Developers Limited (now known as Macrotech Developers Limited) is engaged in the business of construction and development of real estate. Return of income for A.Y 2015-16 was e-filed by the assessee on 31.08.2015, declaring a loss of Rs.10,62,17,774/-. Subsequently, the case of the assessee was selected for scrutiny assessment under CASS. Assessment was thereafter framed by the A.O vide his order passed u/s 143(3), dated Nil and the income of the assessee company was determined at Rs. 3,35,33,911/- after making the following disallowances :
