Surasa Green Lands Private Limited, ... vs Department Of Income Tax

This miscellaneous application under section 254(2) of the Income Tax Act, 1961 was preferred by the Revenue on the order of the ITAT 'B' Bench, Hyderabad in ITA.No.752/Hyd/2013 dated 09.07.2014.

2. The issue in the appeal preferred by assessee was on invoking of jurisdiction by the Ld. CIT under section 263 of the I.T. Act. In the course of assessment, A.O. has noted that assessee has claimed interest at 18% by filing suit before the City Civil Court, Secunderabad and accordingly, brought to tax interest as accrued on the outstanding advance at the end of the year. This order of A.O. was subject matter of appeal separately. In the meantime, Ld. CIT noticed that total advances made by assessee was at Rs.34.72 crores and A.O. 2 M.A.No.176/Hyd/2014 in ITA.No.753/Hyd/2013 M/s. Surasa Green Lands P. Ltd., Hyderabad.

has excluded an amount of Rs.1 cores which was repaid during the year. Accordingly, he invoked jurisdiction under section 263 and directed the A.O. to consider the amount of Rs.34.72 crores for the purpose of calculation of interest. The ITAT on appeal by assessee, relying on the orders of the Coordinate Bench held that the very levy of interest is subject matter of appeal and so the Ld. CIT could not have invoked the jurisdiction under section 263. While setting aside the order of CIT under section 263, the ITAT however, has given an option to the A.O. to examine the principle as well as interest as directed by the ITAT in the quantum appeal.

3. Revenue preferred the present M.A. requesting the ITAT to give a finding on the amount of Rs. 1 crore which was not considered in the Coordinate Bench decision. Since the amount of Rs.1 crore repaid is not part of civil suit, it is requested that ITAT should give a clear direction about taxability of interest on Rs. 1 crore which was not disputed before the City Civil Court.

4. After considering the rival contentions, we are of the opinion that the M.A. preferred by the Revenue is not warranted. The issue before the ITAT was whether Ld. CIT could have invoked the jurisdiction under section 263. It was noticed that at the time of advance there is no understanding that interest would be levied. Therefore, A.O. could not have considered levy of interest on the amount repaid during the year. Apart from that, the very basis of accrual of interest itself was disputed. Therefore, the Ld. CIT could not have invoked jurisdiction under section 263. Under these circumstances, the order was set aside. However, the ITAT also gave an option to the A.O. to examine principle as well as interest in the 3 M.A.No.176/Hyd/2014 in ITA.No.753/Hyd/2013 M/s. Surasa Green Lands P. Ltd., Hyderabad.

quantum appeals. As far as amount of Rs. 1 crore is concerned, the order of Ld. CIT invoking jurisdiction was set aside. As far as the principle amount on which interest is to be considered, it was already left open to the A.O. to be considered in the year of receipt of interest as per directions of Court. In view of the above, we are of the opinion that the petition is misconceived. This sort of application do invite levy of cost on the Assessing Officer. However, we refrain in doing so. With these observations, Revenue application is dismissed

5. In the result, miscellaneous application of the Revenue is dismissed.

Order pronounced in the open Court on 04.02.2015.

Sd/- Sd/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 04th February, 2015

VBP/-

Copy to

1. Asst. Commissioner of Income Tax, Central Circle 3(2) (Erstwhile ACIT, Central Circle-9), Hyderabad

2. M/s. Surasa Green Lands P. Ltd., R.K. Residency, H.No.8-3-229/D/32, 3rd Floor, Venkatagiri, Yousufguda, Hyderabad.

3. CIT (Central), 7th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad

4. Addl. CIT, C.R.-3, Hyderabad

5. D.R. "B" Bench, ITAT, Hyderabad.