DCIT CORPORATE CIRCLE 6(2), CHENNAI vs. SINDYA INFRASTRUCTURE DEVELOPMENT CO. PVT LTD., CHENNAI

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -15, Chennai, dated 30.11.2017 and pertains to assessment year 2013-14. The assessee has filed cross- objection against the very same order of the CIT(Appeals). Therefore, we heard the appeal and the cross-objection together and disposing the same by this common order.

There was a delay of 6 days in filing the appeal by the Revenue.

Shri S. Bharath, the Ld. Departmental Representative, submitted that the CIT(Appeals) directed the Assessing Officer to examine the assessee’s claim with regard to set off of brought forward business losses and unabsorbed depreciation. According to the Ld. D.R., under Section 251(1)(a) of the Income-tax Act, 1961 (in short 'the Act'), the CIT(Appeals) has no power to set aside the matter to the file of the Assessing Officer. The CIT(Appeals) is expected to dispose of the matter one way or other, if necessary, by calling for remand report.

We heard Sh. Saroj Kumar Parida, the Ld.counsel for the assessee also. According to the Ld. counsel, the CIT(Appeals) directed the Assessing Officer to examine the assessee’s claim and to allow set off of brought forward business losses and unabsorbed depreciation on the basis of the material available on record. Referring to the cross- objection, the Ld.counsel submitted that the assessee has advanced its own fund to the group concerns, therefore, the CIT(Appeals) is not justified in confirming the disallowance of interest proportionately to the extent of ₹5.49 Crores.

Having heard the Ld. D.R. and the Ld.counsel for the assessee, this Tribunal finds that the CIT(Appeals) has no power to set aside the assessment to the file of the Assessing Officer. The CIT(Appeals) having the power coterminous with that of the Assessing Officer, is expected to examine the matter himself or he may decide the matter by calling for remand report from the Assessing Officer, if necessary. In this case, the CIT(Appeals) directed the Assessing Officer to examine the assessee’s claim on the basis of the material available on record and to allow set off of brought forward business losses and unabsorbed depreciation. This action of the CIT(Appeals) is tantamount to setting aside to Assessing Officer. Since such a power is not available with the CIT(Appeals), this Tribunal is of the considered opinion that he ought not to have directed the Assessing Officer to examine the matter. However, the fact remains that the issue of set off of brought forward losses and unabsorbed depreciation needs to be re-examined by the Assessing Officer.

Now coming to the cross-objection of the assessee, the CIT(Appeals) restricted the disallowance of interest to the extent of ₹5.49 Crores instead of ₹10.23 Crores. The CIT(Appeals) also found that the assessee is not eligible for deduction under Section 37 of the Act. Now the assessee claims that its own fund was available to advance to the group concerns. Therefore, the CIT(Appeals) ought not to have restricted the disallowance proportionately. The availability of the assessee’s own fund was not brought on record by the Assessing Officer. No material is filed by the assessee even before this Tribunal. Therefore, this Tribunal is of the considered opinion that the matter needs to be re- examined by the Assessing Officer and bring on record the availability of own funds and borrowed funds of the assessee. Accordingly, orders of both the authorities below are set aside and the issue of disallowance under Section 37 of the Act and proportionate disallowance of interest is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee and bring on record the availability of own funds of the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.

In the result, both the appeal of the Revenue and the cross- objection of the assessee are allowed for statistical purposes.