Itta/39/2023 Of M/S. Kausalya Management Services And Structures Private Limited v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD TUESDAY THE TWENTIETH DAY OF JUNETWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL ANDTHE HONOURABLE SRI JUSTICE N.TUKARAMJI ITTA Nos: 38 39 40 41 and 42OF 2023 (lncome Tax Tribunal Appeal Under Section 260-A of the lncome Tax Act, ['1961]against the order of the lncome Tax Appellate Tribunal, [Hyderabad ][Bench ]['A',]Hyderabad in ITA No.174lHydl2O22, lor assessment Year [2018-19 ][dated]18-101022 [prefened ]against the Order of the Commissioner of [lncome ][Tax](Appeals)-12 Hyderabad, Appeal No 1050912017-18 dated 16-02-2022, [preferred]against the Order of the Assistant Contmissioner of [lncome Tax, ][Central ][Circle-2(3),]Hyderabad PAN/GIR No AACCK26I 4F dated [18-03-2021 ]) Between: M/s. Kapil Foods and Structures Private [Limrted, ][rep. by its ][Executive ][Director']Mr.A. Sanjeeva, 2-5-760,Subedari, [Hanamkonda, ][Warangal ][District.] ...APPELLANT .AND Deputy Commissioner of lncome [Tax, Central Circle 2(3) ][Aayakar ][Bhavan,]Basheerbagh. Hyderabad-500 004, [Telangana.] ...RESPONDENT INCOME TAX TRIBUNAL APPEAL [:39 ] [2023] (lncome Tax Tribunal Appeal Under section [260-4 of the ][lncome ][Tax ][Act, ][against]lhe order of the lncome Tax [Appellate ][Tribunal, ][Hyderabad Bench ]['A', ][Hyderabad ][in]ITA No.175/Hydl2o22, for assessment [Year ][2018-19 ][dated ][18-10-2022, prelerred]lhe order of the lncome Tax [Appellate ][Tribunal, ][Hyderabad Bench ]['A', ][Hyderabad ][in]ITA No.175/Hydl2o22, for assessment [Year ][2018-19 ][dated ][18-10-2022, prelerred] against the Order of the Commissioner [of ][lncome ][Tax ][(Appeals)-12 ][Hyderabad,]Appeal No 1051212017 [18. ]dated [rc-A2-2022, preferred ][against ][the ][Order ][of ][the]Assistant Commissioner of [lncome ][Tax, ][Central Circle-2(3), Hyderabad ] No dated [08-04-2021 ][)] Between: M/s. Kausalya Management [Services ][and Structures Private Limited, ][rep ][by- ][its]Executive Director, [fr4i ][K. ][Praveen Kumar, ][3-1-'l88 CVRN ][Nagar, ][Karimnagar-SO5]001 , Telangana. ...APPELLANT AND Deputy Commissioner [of ][lncome Tax, Central Circle 2(3), AayakarBhavan]Basheerbagh. Hyderabad-500 [004 ][Telangana] ...RESPONDENT INCOME TAX TRIBU NAL [PEALNO: ][40OF2023] )(lncome Tax Tribunal Appeal [Under ][Section ][260-4 of the ][lncome Tax ][Act, ][against]the order of the lncome [Tax ][Appellate Tribunal, Hyderabad Bench ][' ][A', ][Hyderabad ][in]ITA No.176/Hydt2o22,'or [assessment Year 2018-19, ][dated ]['18-'10-2022 ][preleted]the order [of the ][commissioner ][of ][lncome ][Tax ][(Appeals)-12 ][Hyderabad,]against No 105OB:2O17'18 [dated 16-02-2022, ][prelened ][against ][the ][Order ][of ][the]Appeal Assistant commissioner [of ][lncome ][Tax, ][Central ][circle-2(3) ][PAN/GlR]No.AAGCS72B5L [dated 29-03-2021 ]) Between: M/s Kausalya Agro [Farms and ][Deve ][opers. Privatg- ][L11rritgg, ]i [rep ][by its Executive]Oirector, lVtr.C. Vilay [Kumar, 16-31, ][gth ][Phase, KPBH ][Main ][Road ][Kukkatpally']Hyderabad-500 072 ...APPELLANT AND Deputy Commissroner of lncome Tax Central Circle 2(3), Aayakar Bhavan,Basheerbagh Hyderabad-So0 004 Telangana .RESPONDENT INCOME TAX TRIBUNAL APPEAL NO:41 OF 2023 (lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, againstthe order of the lncome Tax Appellate Tribunal, Hyderabad Bench [' ]A', [Hyderabad ][in]ITA No.177lHydl2122, for assessment Year 2018-19, [dated ][18-10-2022 ][preferred]against the Order of the Commissioner of lncome Tax [(Appeals)-12 ][Hyderabad,]Appeal No.105OBl2O17-18 daled 16-02-2022, [preferred ]against [the ]Order [of ][the]Assistant Commissioner of lncome Tax, Central Circle-2(3) No.AABC 10260Q dated 1 6-03-2021 .) Between: ...APPELLANT AND Deputy Commissroner of lncome Tax Central Circle 2(3), Aayakar Bhavan,Basheerbagh Hyderabad-So0 004 Telangana .RESPONDENT INCOME TAX TRIBUNAL APPEAL NO:41 OF 2023 (lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, againstthe order of the lncome Tax Appellate Tribunal, Hyderabad Bench [' ]A', [Hyderabad ][in]ITA No.177lHydl2122, for assessment Year 2018-19, [dated ][18-10-2022 ][preferred]against the Order of the Commissioner of lncome Tax [(Appeals)-12 ][Hyderabad,]Appeal No.105OBl2O17-18 daled 16-02-2022, [preferred ]against [the ]Order [of ][the]Assistant Commissioner of lncome Tax, Central Circle-2(3) No.AABC 10260Q dated 1 6-03-2021 .) Between: M/s. lndur Avenues and Foods Private Limited,, rep.byits Executive Director,Mr.G. Srinivas, 11-1-194112, Kanteshwar Road Gangasthan, Nizamabad-503002, Telangana....APPELLANT AND Dep&ty Commissioner of lncome Tax, Central Circle 2(3), AayakarBhavan,Basheerbagh, Hyderabad-S00 004, Telangana ..RESPONDENT INCOME TAX TRIBUNAL APPEAL NO: 42 OF 2023 (lncome Tax Tribunal Appeal Under Section 260-4 of the Income Tax Act, againstthe order of the lncome Tax Appellate Tribunal, Hyderabad Bench [' ]A [', ][Hyderabad ][in]ITA No.172lHydl2122, for assessment Year 2018-19, dated [26-09-2022 prelerred]against the Order of the Commissioner of lncome Tax [(Appeals)-12 ][Hyderabad,]Appeal No.1051112017-18 daled 16-02-2022, [preferred ]against [the ][Order ][of ][the]Assistant Commissioner of lncome Tax, Central Circle-2(3) [PAN/GlR]No.AACCN626 [1 ]H dated 06-04-2021 [.)] Between: M/s. Nalgonda Realtors Private Limited, [rep.]by its Executive Director, Mr [M.]Kumara Swamy, 1-56126 & 27 Plot [No. ][2]5 to 28 LG. Statue, Old Alwal,Secunderabad-500009, Telangana...APPELLANT AND Deputy Commissioner of income Tax, Central [Circle 2 (3), ][Aayakar ][Bh?111---.-]Baihe'erbagh, Hyderabad-500 004. '..RESPONDENT Counsel for the Appellants in ITTAs: Mr. DWARAKANTH, Senior Advocate for Mr. K. SUDHAKAR REDDY Counsel forthe Respondent: M/s K. MAMATA CHOUDARY The Court made the following: COMMON JUDGMENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHIIYANAND THE HON'BLE SRI JUSTICE N. TUKARAMJI I.T.T.A. Nos.38. 39.40, 41 and 42 of 2023 COMMON JUDGMENT:(Per the Hon'ble the Chief Juslice Ujjal Bhuyan) Heard Mr. Dwarakan ath, learned Senior Counsel for the appellants and Ms. K.Mamata Choudary, learned SeniorStanding Counsel, Income Tax Department for therespondent 2. It is submitted that issue raised in this batch is submitted that issue raised in this batch submitted that issue raised in this batch that issue raised in this batch issue raised in this batch raised in this batch in this batch this batch batch ofappeals is covered by the decision of this Court datedO2.O2.2O23 passed in I.T.T.A.No.256 of 2022 and othersRelevant portion of the order dated O2.O2.2O23 reads asfollows: It is submitted that issue raised in this batch is submitted that issue raised in this batch submitted that issue raised in this batch that issue raised in this batch issue raised in this batch raised in this batch in this batch this batch batch of "3. A11 the related appeals have been frled underSection 26OA of the Income Tax Act, 1961 (briefly referred tohereinafter as "the Act) assailing the common order dated21.03.2022 passed by the Income Tax Appellate Tribunal,aHyderabad [Bench ]['A', ][Hyderabad ][(briefly referred ][to]hereinafter as "lribuna.lJ disposing of the following appealscorresponding to the relevant assessment years: HCJ & NTRJLT.T.A.Nos.38, 39, 40, 41 &42 of 202:) 4. Learned Senior Counsel for the appellant hasproposed the following questions as substantial questions oflaw: It is submitted that issue raised in this batch is submitted that issue raised in this batch submitted that issue raised in this batch that issue raised in this batch issue raised in this batch raised in this batch in this batch this batch batch of "3. A11 the related appeals have been frled underSection 26OA of the Income Tax Act, 1961 (briefly referred tohereinafter as "the Act) assailing the common order dated21.03.2022 passed by the Income Tax Appellate Tribunal,aHyderabad [Bench ]['A', ][Hyderabad ][(briefly referred ][to]hereinafter as "lribuna.lJ disposing of the following appealscorresponding to the relevant assessment years: HCJ & NTRJLT.T.A.Nos.38, 39, 40, 41 &42 of 202:) 4. Learned Senior Counsel for the appellant hasproposed the following questions as substantial questions oflaw: 1. Whether on the facts and in the circumstances of thecase, the Tribunal is correct in upholding thejurisdiction of the assessing ofhcer in initiatingreassessment under Section 147 of the Act overlookingthe contention of the appellant that the first proviso toSection 147 of the Act is not applicable since there isfull and true disclosure of all material facts necessarvfor assessment?case, the Tribunal is correct in upholding thejurisdiction of the assessing ofhcer in initiatingreassessment under Section 147 of the Act overlookingthe contention of the appellant that the first proviso toSection 147 of the Act is not applicable since there isfull and true disclosure of all material facts necessarvfor assessment? 2Whether the Tribunal misdirected itself in dealing witha contention based on Section 153-A read with Section153-C of the Act as if the reassessment is challengedbased on the material recovered at the time of search ofa group concern?a contention based on Section 153-A read with Section153-C of the Act as if the reassessment is challengedbased on the material recovered at the time of search ofa group concern? 3. Whether the Tribunal failed to appreciate that thereasoning given in appeal of Indur Developets aadAgencles Ptivate Limited (ITA No.672 /Hyd l2O2Odated 21.3.2022) formed the basis for decision in thisappeal and hence, it cannot be construed as aconcession by a group entity?reasoning given in appeal of Indur Developets aadAgencles Ptivate Limited (ITA No.672 /Hyd l2O2Odated 21.3.2022) formed the basis for decision in thisappeal and hence, it cannot be construed as aconcession by a group entity? 4Whether the Tribunal was justified in remalding thematter for de nouo examination to verify whether theborrowings and advarces made by the appellantcontain interest stipulation or not when it is clearlyadmitted by the appellant in the assessmentproceedings that borrowings had interest stipulationwhile there was no such stipulation for advances givento sister concerns?matter for de nouo examination to verify whether theborrowings and advarces made by the appellantcontain interest stipulation or not when it is clearlyadmitted by the appellant in the assessmentproceedings that borrowings had interest stipulationwhile there was no such stipulation for advances givento sister concerns? I T]CJ & NTRJ& NTRJNTRJ 4T]CJ & NTRJ& NTRJNTRJI.T.'1'.A.Nos.38, :19, 40, 4 I &j 42 of 2023 5. Wlrether thc remar(1 dircction of the Tribunal is [wholly]ur necessarl when, lirr the [purpose ]of Section 37 of [the]Ac1, the interesl on borrowings is a revenueexocnditurr: an(l is admissible for deductionirrcspectivc of thc lir( t ivhether the advances [made out]oI:;uch borrowings vielded interest thereon? 6. Whether rt is $rUrin the [power ]of the Tribunal to [undo]thr. relief granted l)\' the CIT(A) when the [Department]has not chosen lo challenge the order of the [CIT(A)]eitlrer through a scparate appeal or through [cross]ob ections? 5. Upon going through the common orderpassed by the Tribunal ancl as agreed to by Ieaned counselfor the pal ties, the appt:ais arc taken up for final [disposal ][at]the stage o[ admission hcaring itself. 5. Wlrether thc remar(1 dircction of the Tribunal is [wholly]ur necessarl when, lirr the [purpose ]of Section 37 of [the]Ac1, the interesl on borrowings is a revenueexocnditurr: an(l is admissible for deductionirrcspectivc of thc lir( t ivhether the advances [made out]oI:;uch borrowings vielded interest thereon? 6. Whether rt is $rUrin the [power ]of the Tribunal to [undo]thr. relief granted l)\' the CIT(A) when the [Department]has not chosen lo challenge the order of the [CIT(A)]eitlrer through a scparate appeal or through [cross]ob ections? 5. Upon going through the common orderpassed by the Tribunal ancl as agreed to by Ieaned counselfor the pal ties, the appt:ais arc taken up for final [disposal ][at]the stage o[ admission hcaring itself. 6. In one brrnch of appeals, the sole groundraised b) the asscssees lrr:lbre the Tribunal was disallowanceof interesl expenditure ttnder Section 36(l)(iir) of the [Act]made by the assessing officer and partly alfrrmed by the hrstappellate authority. As a matter of fact, first appellateauthorlty had grar-rtcd lirnited relief to the assessees. For thebalance relief, appeals rvr:re filed by the assessees before theTribunal. 7. In anothcr batch of appeals, we hnd that theground urlled beforc the Tnbunal was validity of reopening ofassessmen'. procee dings rrnder Section 147 of the Act. Howcver, ue find fromtheorder dated27 .O3.202i'that instearl of adjudicatingonthe grounds ..-. i.:-;q,. .,..r. raised by the assessees before the Tribunal, Tribunal hadremanded the appeals to the file of the assessing officer. Inparagraph 46 of the common order, Tribunal has held thatassessing officer has to examine the assessees' fund positionas well as the clinching issue as to whether thecorresponding borrowings claimed to have been carrying nointerest involving plotted land buyers, afresh and in light ofall the evidence on wholesome basis only. 9. We are afraid Tribunal was required toadjudicate on the grounds which were urged before it by theassessees/ appellants. Remanding the matter in its entiretyto the assessing olficer has caused serious prejudice to theappellants in as much as even those reliefs which have beengranted by the hrst appellate authority would now standnullihed in view of the Tribunal's direction to the assessingofficer to re-do the whole exercise in its entirety. 10. We may also mention tJlat no cross-appealswere filed by the revenue against the order of the firstappellate authority granting substantial relief to theassessees/ appellants. I l. That being the position, we set aside thecommon order of the Tribunal dated 21.O3.2O22 and directthe Tribunal to hear the appeals before it on the lirnitedgrounds urged by the appellants, namely, disallowance ofinterest expenditure under Section 36(1)(iii) of the Act to theextent disallowed by the first appellate authority as well asthe validity of the re-assessment proceedings.interest expenditure under Section 36(1)(iii) of the Act to theextent disallowed by the first appellate authority as well asthe validity of the re-assessment proceedings. \\ I.T.T.A.Nos.3B, 39, 1O, I I & 42 o12023 12. Thc qucstions framed are accordinglyanswered in favour of thc appellants/ assessees and againstthe re verttre. 13. Consequently, the appealsHowever, t here shall be no order as to costs." areallowed. 3. F<rllowing the above decision dated O2.O2.2O23,all the appeills are a1lou r:d. However, there shall be noorder as to cc,sts. 4. As a sequel, nriscellaneous applications pending,if any, in this appeal shall stald closed. Sd/- B.S. JOINT REGISTRARCat)SECTION OFFICER //TRUE COPY// To, 1The lncome Tax [Appellate Tribunal. Hyderabad Bench ]['A ]' [Hyderabad] The Commissioner [of lncome Tax ][(Appeals)-12 ][Hyderabad'] 2 aThe.Assistant Commissioner [of ][lncome ][Tax, Central ][Circle-2(3)' ][Hyderabad] One CC to [Sri ][Mr ] [REDDY, ][Advocate ] 4 EOne CC [to ]Sri [K]MAMATA [CHOUDARY, ][SENiOT ] [C, ][fOT ] Department DL6wO CD co?rceS' I 'zi @s HIGH COURT areallowed. 3. F<rllowing the above decision dated O2.O2.2O23,all the appeills are a1lou r:d. However, there shall be noorder as to cc,sts. 4. As a sequel, nriscellaneous applications pending,if any, in this appeal shall stald closed. Sd/- B.S. JOINT REGISTRARCat)SECTION OFFICER //TRUE COPY// To, 1The lncome Tax [Appellate Tribunal. Hyderabad Bench ]['A ]' [Hyderabad] The Commissioner [of lncome Tax ][(Appeals)-12 ][Hyderabad'] 2 aThe.Assistant Commissioner [of ][lncome ][Tax, Central ][Circle-2(3)' ][Hyderabad] One CC to [Sri ][Mr ] [REDDY, ][Advocate ] 4 EOne CC [to ]Sri [K]MAMATA [CHOUDARY, ][SENiOT ] [C, ][fOT ] Department DL6wO CD co?rceS' I 'zi @s HIGH COURT DATED:20/06/2023 COMMON JUDGMENT1TTA.No.38,39,40,41 & 42 ot 2023 ALLOWING THE APPEALS ,5 (.)^. )^.I5 [Jil\?MI ];>+,S',1' c