Case Law Details
Dheeraj Consultancy P. Ltd. Vs. ACIT (ITAT Mumbai)
The only revenue earned by the assessee is from dividend income to the tune of Rs. 4.50 lacs. The other expenses apart from finance costs also reveal that there is no business activity of advertising agency / real estate business which was carried on by the assessee as there are negligible expenses such as audit fee, filing fee etc paid by the assesseee during the previous year to keep company afloat and to do statutory compliances. The assessee has claimed that over a period of time it has advanced substantial amount of Rs. 26.49 crore to M/s. Sapphire Land & Development Pvt. Ltd out of total stated consideration of Rs. 30 crores stated to be for purchase of Land viz. Manvelpada situated at Vasai (West), Mumbai, which advances were made out of overdraft/loan of Rs. 30.38 crores obtained from Punjab and Maharashtra co-op Bank Limited . The said amount was stated to have been received back by the assessee on 18-11- 2011 from Emarald Realtors Private Limited. The assessee has failed to bring on record MOU/agreement stated to be entered into with Sapphire Land & Development Private Limited to substantiate its contention that the advances made to M/s. Sapphire Land & Development Pvt. Ltd are towards purchase/acquisition of the said property. All the three companies namely assessee, Sapphire Land & Development Private Limited and Emarald Realtors Private Limited from whom the assessee received back the said amounts, are sister/associated concerns . It was also not brought on record whether the said MOU was registered with registering authority as is required under amended law as contained in The Registration Act, 1908. The cancellation agreement stated to be entered in July 2011 for cancelling MOU is also not on record and hence it could not be seen as to the terms and reasons for the cancellation of the said MOU. Now it is claimed for the first time before the tribunal that there was a fire in the office of the assessee on 18-1 1-20 10 and all the records were destroyed . In any case cancellation deed was alleged to be entered on 18-07-2011 which in any case cannot be part of records alleged to be destroyed in fire which took place on 18-11- 2010 and the assessee could have produced cancellation deed for cancellation of MOU. No such contention of fire taking place in office on 18- 11-2010 was raised before the authority below wherein the A.O framed assessment in the year 2015 and learned CIT-A adjudicated appellate order in 2017. It is pertinent to mention the advances were paid by assessee to M/s. Sapphire Land Development Pvt. Ltd and the refund has been received from Emerald Realtors Pvt. Ltd while there is no such reasons furnished by the assessee as to why Emarald Realtors Private Limited refunded the money on alleged cancellation of MOU , while it is admitted position that all the three companies mainly assessee, M/s. Sapphire Land Development Pvt. Ltd and Emerald Realtors Pvt. Ltd are associated/sister concerns. It becomes all the more important for the assessee to have brought on record cogent evidences to substantiate its contention as all the three parties are related parties/sister concerns. No such evidences are brought on record to prove the genuineness of the transaction for entering into an MOU for purchase of land as well to prove genuineness of the transaction for cancellation of MOU. It is also pertinent to mention there is no income earned by the assessee as per audited financial statements from advertising business as well from real estate business apart from dividend income of Rs. 4.50 lacs . It is also not on record backed with evidences as to what was the purpose of acquiring said land for which the assessee paid substantial advances of more than Rs. 26 crores out of the total stated consideration of Rs. 30 crores. Was it do develop real estate or was it to construct an office for its own use is not known as the same is not brought on record. In the absence of any evidence on records it cannot be concluded whether expenses towards interest costs on bank overdraft were revenue in nature or capital in nature. It is also not on record as to what steps the assessee took post entering into alleged MOU as to getting building plans approved etc. w.r.t. said land proposed to be acquired by the assessee. These are the facts which are especially within the knowledge of the assessee and onus is on the assessee to bring on record cogent evidences to substantiate that interest has been paid for the purposes of business of the assessee and the conditions as stipulated u/s. 36(1)(iii) are duly complied with which in the instant case has not been done by the assessee. Merely because the revenue has accepted the said claim of interest as business expenses in the earlier years in the summary proceedings u/s. 143(1) does not create res-judicata as revenue has never gone into the details of the said claim as the return of income was accepted in summary manner u/s 143(1) without scrutiny being conducted u/s. 143(3) r.w.s. 143(2). Thus, mere acceptance of the claim in earlier years in proceedings u/s 143(1) does not debar Revenue from examining the claim on merits in subsequent years and does not create a bar of res-judicata . We are fully aware that consistency is to be maintained but the claim of interest expenses was never examined by the revenue in any of the earlier years as scrutiny proceedings were not initiated in any of the earlier years since said loans were raised by the assessee. Thus only bald statements are made by the assessee for claiming that the interest has been paid for the business purposes while no such evidences are brought on record by the assessee to prove its contention that the said loans were used for business purposes by the assessee and mandate of Section 36(1)(iii) was complied with. The payments and the return thereof of the said advances are from the sister concerns and in the absence thereof of the evidences on record to substantiate that these were business expenses, we are afraid claim of the assessee to allow interest expenses on bank overdraft to the tune of Rs. 1,37,08,749/- as business expenses cannot be accepted and hence the appeal of the assessee is dismissed. Thus, keeping in view entire factual matrix of the case, the claim of the assessee is rejected.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This appeal, filed by the assessee, being ITA No. 3377/Mum/2017 for assessment year 2012-13, is directed against the appellate order dated 31- 01-2017 passed by learned Commissioner of Income-tax (Appeals)-53, Mumbai (hereinafter called “the CIT(A)”) for assessment year 2012-13, appellate proceedings had arisen before learned CIT(A) from the assessment order dated 26.03.2015 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3)of the Income-tax Act, 1961 (hereinafter called “the Act”).
2. The grounds of appeal raised by the Assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
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