RAMOJI RAO (HUF), HYDERABAD,HYDERABAD vs. DCIT, CIRCLE-16(2), HYDERABAD, HYDERABAD
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the CIT(A) made a new disallowance not arising from the original assessment order. Therefore, the disallowance of interest expenditure made by the CIT(A) was directed to be deleted.
What were the facts?
The assessee claimed interest expenditure of Rs. 30,02,657/- in two assessment years. The Assessing Officer initially invoked Section 14A disallowances, but the CIT(A) deleted these while disallowing the interest expenditure on the grounds that borrowed funds were used for purposes other than business.
What were the issues?
Whether the CIT(A) can make a new disallowance of interest expenditure that was not part of the original assessment order, even if Section 14A disallowances were deleted?
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(4)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. Shapoorji Pallonji Mistry278 citing44 ITR 891 · 1962 · SC · Read judgment
- CIT v. Union Tyres135 citing240 ITR 556 · 1999 · HC
- Gurinder Mohan Singh Nindrajog v. CIT50 citing348 ITR 170 · 2012 · HC · Read judgment
- Sait Bansilal & Rangisetti Veeranna v. Commissioner of Income Tax7 citing83 ITR 750 · 1972 · HC
Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD
Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU
These two assessee’s appeals for AYs.2012-13 & 2011-12 arise from the CIT(A)-4, Hyderabad’s order(s) dated 28-02- 2017 & 13-03-2017 passed in case Nos.0131 & 051 / 15-16 & 14-15 / DCIT,Cir.16(2) / CIT(A)-4 / Hyd /16-17, involving proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]; respectively. Heard both the parties. Case files perused.
:- 2 -: & 815/Hyd/2017
It emerges at the outset that the assessee’s sole substantive grievance herein challenges identical action of the learned lower authorities disallowing interest expenditure of Rs.30,02,657/- in both these assessment years. His lower appellate discussion (AY.2012-13) to this effect reads as follows: “5.3.1 I have carefully considered the facts of the case, the assessment order and the submissions of the appellant. During the course of appellate proceedings the appellant submitted statement showing details of interest paid and interest provided for the financial year 2011-12 along with copy of ledger account, copy of Union Bank of India, Escrow Account as per books of account, etc. On verification of the details and cash flow statement furnished by the appellant it was found that the appellant has not utilized the borrowed funds for the purpose of investments which earn income which does not form part of total income and hence, the applicability of Section 14A does not attract in this case. Hence, the addition made by the Assessing Officer in this regard is deleted. 5.3.2 However, it was noticed that the appellant has claimed interest of Rs.30,02,657/ - in the profit and loss account. Since the appellant is having borrowed funds and the borrowed funds have been utilized for purposes other than business, the interest of Rs.30 lakhs is not allowed as expenditure and therefore, the interest amount was confirmed”. Both the learned representatives reiterated their respective stands against and in support of the lower authorities’ action disallowing the impugned identical interest amount of Rs.30,02,657/-. We notice in this factual backdrop that the Assessing Officer herein had framed his identical Section 143(3) regular assessments on 30-03-2015 & 19-03-2014; respectively invoking Section 14A disallowances. It is further an admitted fact that the assessee preferred appeal(s) wherein the CIT(A) has although deleted the corresponding Section 14A disallowances but has proceeded to disallow the impugned interest figures in the instant twin assessment years.
:- 3 -: & 815/Hyd/2017
We have given our thoughtful consideration to assessee’s sole substantive grievance and find merit in the same. This is for the reason that the Assessing Officer had never declined such an interest claim as the same has emanated from Section 14A r.w. Rule 8D disallowance’s computation pertaining to this taxpayer’s alleged exempt income. The question as to whether the CIT(A) enhances assessee’s income by way of making altogether a new disallowance is found to be no more res integra in view of the CIT Vs. Shaporji Pallonji Mistry (1962) [44 ITR 891] (SC), Sait Bansilal and Raggisetti Veeranna (1972) 83 ITR 750 (AP), Gurvinder Mohan Singh Nindrajog (2012) [348 ITR 170] (Del), CIT Vs. Union Tyres 240 ITR 556 (Del) adjudicated the same in assessee’s favour and against the department. Their lordships hold that such an enhancement is restricted only to the additions made in the assessment only. We therefore direct the Assessing Officer to delete the impugned identical interest disallowances in both these assessment years. No other ground has been pressed before us.
Both these assessee’s appeals are allowed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 17th August, 2021
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