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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM
This appeal by the Department is directed against the order of Commissioner of Income Tax (Appeals)-3, Pune dated 27.06.2017 for the assessment year 2010-11.
2 ITA No.2463/PUN/2017 A.Y.2010-11
The Revenue has assailed the findings of Commissioner of Income Tax
(Appeals) by raising following grounds:
“1. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the disallowance of interest expenditure of Rs.81,79,110/- without appreciating the fact that it in turn leads to over valuation of qualifying assets (stock in trade in the assessee’s case) that will affect the future profitability with the same amount at the time of sale of such qualifying assets. 2. On the facts and circumstances of the case, the CIT(A) erred in not appreciating the fact that the interest so capitalized as qualifying assets are trading assets in case of the assessee as it is involved in the business of Sale and Purchase of Land. 3. The appellant prays to be allowed to add, amend, modify, rectify, delete or raise any grounds of appeal during the course of appellate proceedings.”
Shri M.K. Verma representing the Department submitted that during
scrutiny assessment proceedings, the Assessing Officer observed that the
assessee company had advanced interest free loans to the persons namely i)
Kruti Jain; ii) L.K. Jain (HUF) and iii) L.K. Jain. Before the Assessing Officer,
assessee filed no objection for the addition vide letter dated 08.02.2013. In First
Appellate Proceedings, the assessee disputed the grant of any concession for
making addition. The Commissioner of Income Tax (Appeals) deleted the addition
on the premise that the entire interest component has been capitalized in
qualifying assets and the disallowance has resulted in reducing quantum of
interest attributable to qualifying assets.
On the other hand, Shri Nikhil Pathak appearing on behalf of the assessee
vehemently supported the findings of Commissioner of Income Tax (Appeals).
The ld. AR submitted that alleged letter of concession dated 08.02.2013 referred
to by the Assessing Officer in the assessment order was never filed by the
assessee.
3 ITA No.2463/PUN/2017 A.Y.2010-11
Both sides heard. Orders of the Authorities below perused. The solitary
issue raised in appeal by the Department is against deleting of disallowance of
interest expenditure Rs.81,79,110/-. Undisputedly, the assessee has advanced
interest free loans to three persons namely i) Kruti Jain; ii) L.K. Jain (HUF) and
iii) L.K. Jain. I observe that the Assessing Officer has made addition merely on
the basis of alleged no objection given by the assessee for making addition vide
letter dated 08.02.2013 and the Commissioner of Income Tax (Appeals) deleted
the addition by holding that disallowance has resulted into reducing the
quantum of interest. Both the Authorities below have failed to examine merits
and true facts before deciding the issue in hand.
In so far as the issue whether the concession was given by assessee or not,
is a matter of debate as letter granting concession dated 08.02.2013, is not
available before the Tribunal. Dehors the concession allegedly allowed by the
assessee for the addition, I deem it appropriate to remit the issue back to the file
of Commissioner of Income Tax (Appeals) for adjudicating the issue on merits.
The Commissioner of Income Tax (Appeals) will decide the issue afresh after
affording sufficient opportunity of hearing to the assessee, in accordance with
law. Accordingly, the impugned order is set aside and appeal of the Revenue is
allowed for statistical purpose in the terms aforesaid.
In the result, appeal of the Revenue is allowed for statistical purpose. 7.
Order pronounced on Monday the 26th day of November, 2018.
Sd/- (�वकास अव�थी /VIKAS AWASTHY) �या�यक सद�य/JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 26th November, 2018. SB
4 ITA No.2463/PUN/2017 A.Y.2010-11
आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-3, Pune. 4. The Pr. CIT-2, Pune. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.