KAILASH MOTORS,KANPUR vs. ASTT. COMMISSIONER OF INCOME TAX-II, KANPUR

First we will take up appeal in I.T.A. No.15/Lkw/2017 for assessment year 2006-07. The only issue in dispute in this appeal is regarding the disallowance amounting to Rs.30,07,117/- out of interest expenses claimed by the assessee. The Assessing Officer, in the assessment order dated 27/02/2015 passed u/s 143(3)/254 of the I. T. Act, made the aforesaid disallowance u/s 14A of the Act. Being aggrieved, the assessee preferred appeal before the learned CIT(A). The assessee’s appeal against the aforesaid disallowance of Rs.30,07,117/- out of interest expenses claimed, was dismissed by the learned CIT(A) who upheld the aforesaid disallowance. However, the learned CIT(A) opined that the aforesaid disallowance was to be made u/s 36(1)(iii) and not u/s 14A of the Act. The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 03/10/2016 of the learned CIT(A).

At the time of hearing before us, learned Counsel for the assessee submitted that the learned CIT(A) invoked the provisions of section 36(1)(iii) of the Act without giving opportunity to the assessee, as far as applicability of section 36(1)(iii) was concerned. He submitted that the issue regarding aforesaid disallowance of Rs.30,07,117/- should be set aside to the file of the learned CIT(A) with the direction to pass de novo order in accordance with law after providing reasonable opportunity to the assessee. The learned Departmental Representative for Revenue expressed no objection to this. In view of the foregoing, as representatives of both sides are in agreement on this, the disallowance of Rs.30,07,117/- is restored back to the file of the CIT(A) with the direction to pas de novo order in accordance with law after providing reasonable opportunity to the assessee.

On merits, facts of I.T.A. No.16/Lkw/2017 and I.T.A. No.695/Lkw/2017 are also similar to facts of appeal vide I.T.A. No.15/Lkw/2017. Facts being similar in pari materia, these two appeals vide I.T.A. No.16/Lkw/2017 and I.T.A. No.695/Lkw/2017 also deserve to be restored back to the file of the CIT(A) as the same reasoning would apply mutatis mutandis in these two appeals, as in I.T.A. No.15/Lkw/2017. In view of the foregoing, the appeal vide I.T.A. No.16/Lkw/2017 and I.T.A. No.695/Lkw/2017 are also is restored back to the file of the CIT(A) with the direction to pass de novo order in accordance with law after providing reasonable opportunity to the assessee.

In the result, all the appeals of the assessee are allowed for statistical purposes.