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Income Tax Appellate Tribunal, CHANDIGARH
Before: Sh. SANJAY GARG
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)].
The assessee has taken the following grounds of appeal:
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
ITA-1003/CHD/2018 Page 2 of 3
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.
The assessee preferred the appeal against the said
disallowance before the CIT(A) but remained unsuccessful.
As per the written submissions, the contention of the
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)
The ld. DR has submitted that the assessee could not
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.
ITA-1003/CHD/2018 Page 3 of 3
On going through the orders of the lower authorities,
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.
In the result, appeal of the assessee is allowed for
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