ASHOK KUMAR & CO. MERCANTILE PVT. LTD.,LUDHIANA vs. ACIT, C-VII, LUDHIANA

आदेश/ORDER

The present appeal has been preferred by the assessee against the order dated 22.05.2018 of the Commissioner of Income Tax (Appeals)-3, Ludhiana [hereinafter referred to as CIT(A)].

i) That the learned CIT (A) has erred in Law & Facts being unjustifiably upheld the additions wrongly made by Ld. A.O. ii) That the addition on account of disallowance of interest amouting to Rs. 701500/- is wrong and illegal, since the factual position has totally been ignored by the A.O as well as by the Ld. CIT (A). iii) That the interest u/s 234A has wrongly been charged by Ld. A.O. since the return has been filed before the due date of filing of return i.e. on 29.11.2014. Hence, no interest u/s 234A can be levied. iv) That the appellant craves to amend, alter, change any of the ground(s) of appeal. 3. A perusal of the grounds of appeal shows that the main grievance of the assessee is against the confirmation of disallowance of interest amounting to Rs. 7,01,500/-. The

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AO during the assessment proceedings noticed that the

assessee had made investment in equity shares of its sister

concern namely M/s AKC Motors Pvt. Ltd., Ludhiana. He

further noted that the assessee had used borrowed funds for

the aforesaid investment. He held that since the aforesaid

investment in the share of the sister concern was not

relevant to the business activity of the assessee, therefore

assessee was not entitled to the claim of the interest

expenditure incurred for the said purpose. He, accordingly,

invoking the provisions of Section 36(1)(iii) of the Act made

the impugned disallowance of Rs. 7,01,500/- out of interest

expenditure claimed.

disallowance before the CIT(A) but remained unsuccessful.

assessee has been that the aforesaid investment in sister

concern was made out of business expediency. Further that

the assessee did not use the borrowed funds for the same.

That the aforesaid investment was made out of own funds of

the assessee. Reliance has also been placed on the decision

of the Hon'ble Supreme Court in the case of Hero Cycles (P)

Ltd. Vs CIT (2015) 63 Taxmann 308 (S.C)

bring reliable evidence before the lower authorities to prove

that there was any business expediency for the aforesaid

investment made in the shares of sister concern and further

that the assessee had used its own/surplus funds for making

the aforesaid investment.

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this Bench is of the view that the matter needs a fresh

examination by the AO. The impugned order of the CIT(A) is,

therefore, set aside. The matter is restored to the file of the

AO to examine the aforesaid pleas of the assessee and pass a

speaking order in accordance with law after giving an

opportunity of being heard to the assessee.

statistical purposes.

Order pronounced in the Open Court.

Sd/- ( �ी संजय गग� ) (SANJAY GARG) �या�यक सद�य/ Judicial Member

Dated: 21.01.2019 “Poonam” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकर आयु�त/ CIT 3. आयकर आयु�त (अपील)/ The CIT(A) 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6.

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar