M/S. Kausalya Agra Farms And ... vs Deputy Commissioner Of Income Tax
2023 Latest Caselaw 549 Tel

    THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN

                                 AND

           THE HON'BLE SRI JUSTICE N. TUKARAMJI


I.T.T.A.Nos.256, 257, 259, 261, 262, 263, 264, 265, 266,
 268, 269, 270, 271, 272, 273, 274, 275, 279, 281, 283,
                  284 and 294 of 2022


COMMON JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)


      This order will dispose of the above batch of income tax

appeals.


      2.     Heard Mr. Dwarakanath, learned Senior Counsel

representing Mr. Karthik Ramana Puttam Reddy, learned

counsel for the assessees/appellants and Ms. K.Mamata

Choudary,      learned       Standing    Counsel,      Income       Tax

Department      and    Ms.     Sapna    Reddy,     learned    counsel

representing Mr. J.V.Prasad, learned Standing Counsel,

Income Tax Department for the respondents.

3. All the related appeals have been filed under

Section 260A of the Income Tax Act, 1961 (briefly referred to

hereinafter as 'the Act') assailing the common order dated

21.03.2022 passed by the Income Tax Appellate Tribunal, 2 HCJ & NTRJ I.T.T.A.Nos.259 of 2022 & batch

Hyderabad Bench 'A', Hyderabad (briefly referred to

hereinafter as 'Tribunal') disposing of the following appeals

corresponding to the relevant assessment years:

Sl.No. & Appellant ITA No. Asst. Year

1. Dakshin 651/Hyd/2020 2012-13 Infrastructures Private Limited, Hyderabad.

2. Kapil Property 652/Hyd/2020 2013-14 Developers Limited, Hanumakonda.

3. Kapil Foods and           653/Hyd/2020                   2012-13
Structures Private
                             654/Hyd/2020                   2013-14
Limited, Warangal.
4. Nalgonda Realtors         655/Hyd/2020                   2012-13
Private Limited,
                             656/Hyd/2020                   2013-14
Secunderabad.
                             657/Hyd/2020                   2017-18
5. Ujwala Publications       658/Hyd/2020                   2012-13
and Developers Pvt.
                             659/Hyd/2020                   2013-14
Ltd., Warangal.
6. M/s. Indur Avenues        666/Hyd/2020                   2012-13
and Foods Private
                             667/Hyd/2020                   2013-14
Limited, Nizamabad.
7. M/s.Kausalya              668/Hyd/2020                   2012-13
Management Services
                             669/Hyd/2020                   2013-14
and Structures Private
Limited, Karimnagar.         691/Hyd/2020                   2017-18
8. Indur Developers          670/Hyd/2020                   2012-13
and Agencies Private
                             671/Hyd/2020                   2013-14
Limited, Vijayawada.
                             672/Hyd/2020                   2016-17
9. Kausalya Agro             673/Hyd/2020                   2012-13
Farms & Developers
                             674/Hyd/2020                   2013-14
Private Limited,
Hyderabad.                   675/Hyd/2020                   2014-15
                             676/Hyd/2020                   2017-18
                                         3                         HCJ & NTRJ
                                              I.T.T.A.Nos.259 of 2022 & batch




10. Kausalya Shelters            678/Hyd/2020                 2013-14
Private Limited,
                                 679/Hyd/2020                 2014-15
Karimnagar.
                                 680/Hyd/2020                 2017-18
11. M/s. Kausalya                681/Hyd/2020                 2012-13
Avenues Private
                                 682/Hyd/2020                 2013-14
Limited, Karimnagar.
                                 683/Hyd/2020                 2016-17
                                 684/Hyd/2020                 2017-18
                                 685/Hyd/2020                 2018-19
12. Kapil Infra                  686/Hyd/2020                 2012-13
Avenues Private
                                 687/Hyd/2020                 2013-14
Limited, Vijayawada.
13. Preethi Foods and            688/Hyd/2020                 2012-13
Villas Private Limited,
                                 689/Hyd/2020                 2013-14
Khammam.
                                 690/Hyd/2020                 2017-18

4. Learned Senior Counsel for the appellant has

proposed the following questions as substantial questions of

law:

1. Whether on the facts and in the circumstances of the case, the Tribunal is correct in upholding the jurisdiction of the assessing officer in initiating reassessment under Section 147 of the Act overlooking the contention of the appellant that the first proviso to Section 147 of the Act is not applicable since there is full and true disclosure of all material facts necessary for assessment?

2. Whether the Tribunal misdirected itself in dealing with a contention based on Section 153-A read with Section 153- C of the Act as if the reassessment is challenged based on 4 HCJ & NTRJ I.T.T.A.Nos.259 of 2022 & batch

the material recovered at the time of search of a group concern?

3. Whether the Tribunal failed to appreciate that the reasoning given in appeal of Indur Developers and Agencies Private Limited (ITA No.672/Hyd/2020 dated 21.3.2022) formed the basis for decision in this appeal and hence, it cannot be construed as a concession by a group entity?

4. Whether the Tribunal was justified in remanding the matter for de novo examination to verify whether the borrowings and advances made by the appellant contain interest stipulation or not when it is clearly admitted by the appellant in the assessment proceedings that borrowings had interest stipulation while there was no such stipulation for advances given to sister concerns?

5. Whether the remand direction of the Tribunal is wholly unnecessary when, for the purpose of Section 37 of the Act, the interest on borrowings is a revenue expenditure and is admissible for deduction irrespective of the fact whether the advances made out of such borrowings yielded interest thereon?

6. Whether it is within the power of the Tribunal to undo the relief granted by the CIT(A) when the Department has not chosen to challenge the order of the CIT(A) either through a separate appeal or through cross objections?

5. Upon going through the common order passed by

the Tribunal and as agreed to by learned counsel for the 5 HCJ & NTRJ I.T.T.A.Nos.259 of 2022 & batch

parties, the appeals are taken up for final disposal at the

stage of admission hearing itself.

6. In one bunch of appeals, the sole ground raised by

the assessees before the Tribunal was disallowance of interest

expenditure under Section 36(1)(iii) of the Act made by the

assessing officer and partly affirmed by the first appellate

authority. As a matter of fact, first appellate authority had

granted limited relief to the assessees. For the balance relief,

appeals were filed by the assessees before the Tribunal.

7. In another batch of appeals, we find that the

ground urged before the Tribunal was validity of reopening of

assessment proceedings under Section 147 of the Act.

8. However, we find from the order dated 21.03.2022

that instead of adjudicating on the grounds raised by the

assessees before the Tribunal, Tribunal had remanded the

appeals to the file of the assessing officer. In paragraph 46 of

the common order, Tribunal has held that assessing officer

has to examine the assessees' fund position as well as the 6 HCJ & NTRJ I.T.T.A.Nos.259 of 2022 & batch

clinching issue as to whether the corresponding borrowings

claimed to have been carrying no interest involving plotted

land buyers, afresh and in light of all the evidence on

wholesome basis only.

9. We are afraid Tribunal was required to adjudicate

on the grounds which were urged before it by the

assessees/appellants. Remanding the matter in its entirety to

the assessing officer has caused serious prejudice to the

appellants in as much as even those reliefs which have been

granted by the first appellate authority would now stand

nullified in view of the Tribunal's direction to the assessing

officer to re-do the whole exercise in its entirety.

10. We may also mention that no cross-appeals were

filed by the revenue against the order of the first appellate

authority granting substantial relief to the assessees/

appellants.

11. That being the position, we set aside the common

order of the Tribunal dated 21.03.2022 and direct the 7 HCJ & NTRJ I.T.T.A.Nos.259 of 2022 & batch

Tribunal to hear the appeals before it on the limited grounds

urged by the appellants, namely, disallowance of interest

expenditure under Section 36(1)(iii) of the Act to the extent

disallowed by the first appellate authority as well as the

validity of the re-assessment proceedings.

12. The questions framed are accordingly answered in

favour of the appellants/assessees and against the revenue.

13. Consequently, the appeals are allowed. However,

there shall be no order as to costs.

14. As a sequel, miscellaneous applications pending, if

any, in this Appeal, shall stand closed.

_______________________ UJJAL BHUYAN, CJ

_______________________ N.TUKARAMJI, J Date: 02.02.2023 KL