ITO, CORP WARD -6(4), CHENNAI vs. SRI KUMARAN WIND ENERGY PVT LTD, CHENNAI

This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals)-16, Chennai, dated 28.09.2018 for the assessment year 2008-09. The only issue involved in this appeal is relating to deletion of addition made of interest payment for ₹.1,46,74,910/- by admitting additional evidence is in violation of Rule 46A of the Income Tax Rules, 1962.

Brief facts of the case are that the assessee filed its return of income for the assessment year 2008-09 admitting a net loss of ₹.2,34,05,370/-. Scrutiny assessment was completed by accepting the returned income of the assessee. On verification, the Assessing Officer noted from the profit and loss account that the assessee has debited ₹.9,35,013/- towards pre-operative expenses, which would have been capitalized at the commencement of business and included in the cost of assets and depreciation should have claimed. Hence, the pro-rata write-off in the current year needs to be disallowed. Further, the Assessing Officer noted that despite the assessee has repaid part of the loan to the extent of ₹.1,09,38,161/-, the assessee has claimed to have paid interest of ₹.1,46,74,910/- during the assessment year 2008- 09 than the earlier assessment year 2007-08 of ₹.74,37,143/- and thus, the excess claim of payment of interest needs to be disallowed. Accordingly, the assessment was reopened under section 147 of the Income Tax Act, 1961 [“Act” in short] and notice under section 148 of the Act has been issued. The reasons for reopening were also communicated to the assessee. The assessee was also given a final opportunity vide notice under section 142(1) of the Act dated 15.10.2013. Since there was no response from the assessee, the Assessing Officer has completed the assessment under section 144 r.w.s. 147 of the Act dated 31.10.2013 by making various disallowances. On appeal, by considering the bank statement, the ld. CIT(A) directed the Assessing Officer to delete the addition made of interest payment for ₹.1,46.74,910/-.

Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that when the assessment was completed under section 144 r.w.s. 147 of the Act, without obtaining remand report from the Assessing Officer, the ld. CIT(A) has considered the additional evidences furnished by the assessee, is in violation of Rule 46A of the Income Tax Rules, 1962 and pleaded for remitting the matter to the Assessing Officer for fresh consideration.

On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A).

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the Assessing Officer disallowed the interest payment on the loan taken from State Bank of Mysore on the ground that the interest charged was almost double of the previous year. By considering the bank statement furnished by the assessee, the ld. CIT(A) has directed the Assessing Officer to delete the addition made of interest payment, without obtaining any report from the Assessing Officer, which appears to be in violation of Rule 46A of the Income Tax Rules, 1962. Accordingly, we set aside the order of the ld. CIT(A) on this issue and remit the matter back to the file of the Assessing Officer for fresh adjudication in accordance with law. The assessee is also directed to furnish complete details before the Assessing Officer for verification and deciding the issue.

In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced on 30th November, 2022 at Chennai.