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Income Tax Appellate Tribunal, BANGALORE BENCHES “ C ” BENCH: BANGALORE
Before: SHRI JASON P BOAZ & SHRI PAVAN KUMAR GADALE
O R D E R
PER SHRI PAVAN KUMAR GADALE, JM :
The revenue has filed an appeal against the order of Commissioner of Income Tax (Appeals), Davangere passed u/s 154 and u/s. 250 of the Income Tax Act, 1961.
The revenue has raised the following grounds :
Brief facts of the case are that the assessee is an AOP and engaged in the business of accepting deposits and lending loans and filed the Return of income for the Asst. Year 2014-15 on 26.9.2014 disclosing NIL income after claiming deduction under Section 80P. The Return of income was processed under Section 143(1) of the Act and notice was issued under Section 143(2) of the Act to the assessee. The Assessing Officer on perusal of the financial statement found that the assessee has earned interest on various deposits and income from other sources from nationalized banks. The Assessing Officer applied the provisions of Section 80P of the Act and made addition of interest income from deposits and Assessed total income of Rs.82,97,749 and Section 143(3) dt.9.12.2016. Subsequently, a rectification order was issued under Section 154 on 17.1.2017 determining a total income at Rs.65,29,407. Aggrieved by the order under Section 154 of the Act , the assessee filed appeal before the CIT (Appeals). The CIT (Appeals) after considering the grounds of appeal
and submissions of the assessee and finding of the Assessing Officer has relied on the judicial decisions and treated the interest income as ‘income from other sources’ and worked out Net Interest after allowing the cost of funds and Pro-rata Administrative Expenses and directed the Assessing Officer to delete the addition and partly allowed the appeal.
4. Aggrieved by the order of the learned CIT (Appeals), the revenue has filed an appeal before the Tribunal. The learned Departmental Representative vehemently argued that the learned CIT (Appeals) has calculated the working of the cost of funds and administrative expenses which the Assessing Officer never verified and examined and was deprived an opportunity a the assessee has submitted the details in the appellate proceedings and prayed for allowing the appeal.. Per contra, the learned Authorised Representative relied on the orders of the learned CIT (Appeals).
We have heard the rival submissions and perused the material on record. The learned Departmental Representative made submission on the calculations of the learned CIT (Appeals) in respect of cost of funds and administrative expenses which were not brought to the knowledge of the Assessing Officer and determined Net Interest Income. We find on perusal of the learned CIT (Appeals) order, the appellate authority has relied on the judicial decision and worked out the cost of funds and pro-rata administrative expenses to be allowed as deduction from the gross interest. We find strength in the submissions of the learned Departmental Representative that these facts were not verified by the Assessing Officer nor filed in the assessment proceedings and further the learned CIT (Appeals) has not called for Remand Report/comments of the Assessing Officer on submissions of the assessee, we are of the considered opinion that the matter needs to be examined. Accordingly, we set aside the order of learned CIT (Appeals) and restore the entire disputed issue for limited purpose to the file of the Assessing Officer to verify and examine the claim of the assessee and allow the grounds of appeal of Revenue for statistical purposes.