DCIT Vs Evita Construction Pvt. Limited (ITAT Mumbai)
The case of DCIT Vs Evita Construction Pvt. Limited was heard by the Income Tax Appellate Tribunal (ITAT) Mumbai. This appeal was filed by the Revenue challenging the order of the Commissioner of Income Tax (Appeals) [CIT(A)] related to the assessment year 2015-16. The key issue in this case was the deletion of an addition made by the Assessing Officer (AO) regarding the interest income of ₹1,87,44,483 received on fixed deposits and its netting off against interest expenditure capitalized in work-in-progress (WIP).
Evita Construction Pvt. Limited is a company engaged in the real estate business, focusing on the development and construction of residential and commercial premises. The company filed its income tax return for the assessment year 2015-16, declaring a loss of ₹4,84,78,892. During the assessment, the AO added ₹1,87,44,483 as interest income from fixed deposits, which the company had not offered to tax. Additionally, the AO added ₹2,36,769 under Section 36(1)(va) due to delayed deposit of employees’ Provident Fund contributions.
The company appealed to the CIT(A), who deleted the addition made by the AO on the grounds that the fixed deposits were not from surplus funds but were instead linked to business requirements. The CIT(A) noted that a similar decision had been made for the previous assessment year (2014-15), where the Tribunal ruled in favor of the company.
