RDC Ventures Vs PCIT (ITAT Mumbai)
The assessee appealed against the order dated 30.03.2023 passed by the Principal Commissioner of Income Tax (Pr. CIT)-27, Mumbai under Section 263 of the Income-tax Act for Assessment Year 2018-19. The original assessment had been completed under Section 143(3) read with Sections 143(3A) and 143(3B) by accepting the returned income of ₹2,28,82,260 after scrutiny on the issues of income from real estate business and unsecured loans.
Subsequently, the Pr. CIT issued notices under Section 263 on 01.03.2023 and 03.03.2023. The Pr. CIT observed that the assessee, being a builder and developer, had reported sales of ₹15,53,02,580, closing finished goods of ₹15,27,80,503, interest expenditure of ₹1,90,10,995 and TDR expenses of ₹5,00,000. The Pr. CIT proceeded on the basis that the assessee was following the project completion method of accounting and, relying on the decision in Wallstreet Construction Ltd. Vs. JCIT, held that interest attributable to projects should be allowed only in the year of project completion. The Pr. CIT further observed that the assessee had obtained unsecured loans of ₹4,96,36,010, paid interest of ₹31,98,292 thereon, and had a secured loan from Tata Capital Housing Finance Ltd. of ₹1,79,98,713 requiring examination. The Pr. CIT also considered the TDR expenses to be capital expenditure and concluded that the Assessing Officer (AO) had failed to examine these issues, rendering the assessment order erroneous and prejudicial to the interests of the Revenue.
