MAHINDRA WORLD CITY DEVELOPERS Vs. THE ASSISTANT COMMISSIONER

JUDGEMENT

(1.) The Assessee, Mahindra World City Developers Limited, Chennai has filed these Appeals under Section 260A of the Act raising the following purported substantial questions of law arising from the order of the Income Tax Appellate Tribunal dated 27.6.2018 for the Assessment Years 2010-2011 to 2012-2013:-

(2.) The learned Tribunal disallowed the claim of interest on the borrowed capital to purchase the land in question by the Assessee who is engaged in the business of Real Estate, making the following observation in the impugned order:-

(3.) Learned counsel for the Appellant-Assessee, Mr.Vijayaraghavan urged before us that since the Assessee is engaged in the business of Real Estate, even though interest paid on the borrowed capital to purchase the land in question purchase of land in question was capitalized in the books of accounts and was shown as work in progress in the balance sheet, after insertion of Section 145A with effect from 1.4.2017 by the Finance Act, 2018 provided for specific method of valuation of inventory (the land in question) by the Assessee and the interest paid on capital borrowed, irrespective of it being capitalised or not, is required to be allowed as deduction while computing the income for the Assessment Years in question. He referred to the decision of the Delhi High Court in the case of The Chamber of Tax Consultants and another v. Union of India and others ((2018) 400 ITR 178 (Delhi)) wherein the Division Bench of Delhi High Court struck down the CBDT Notification No.87 of 2016 dated 29th September 2016 including the 'Income Computation and Disclosure Standards' (ICDS) in exercise of power conferred under Section 145(2) of the Act. The Division Bench of the Delhi High Court held that there was no statutory basis or sanction for such notification issued by the CBDT and under Section 119 of the Act, such notification could not have been issued and finding the same as ultra vires, the Division Bench of the Delhi High Court struck down the said Notification. Consequently, the provisions of Section 145A were inserted in the Act by Finance Act 18 with effect from 1.4.2017.