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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.D. AGRAWAL, G.D. AGRAWAL & AND BEFORE SHRI & AND SMT. BEENA A. PILLAI SMT. BEENA A. PILLAISMT. BEENA A. PILLAI SMT. BEENA A. PILLAI
PER G.D. AGRAWAL, PER G.D. AGRAWAL, PRESIDENT PER G.D. AGRAWAL, PER G.D. AGRAWAL, PRESIDENT PRESIDENT :- PRESIDENT
This appeal by the assessee for the assessment year 2009-10 is directed against the order of learned CIT(A)-XVIII, New Delhi dated 3rd March, 2014.
Ground No.1 of the assessee’s appeal, which reads as under, was not pressed by the learned counsel for the assessee:-
“On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals)-XVIII, New Delhi (“the CIT(A)”) erred in not holding that the assessment order passed by the Deputy Commissioner of Income Tax, Circle-15(1), New Delhi (‘the AO') u/s. 143(3) of the Income Tax Act, 1961 (‘the Act’) is in violation of the principles of natural justice.”
Accordingly, the same is rejected as not pressed.
Ground No.2 reads as under :-
“1. On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the AO of disallowing interest expenses amounting to Rs.1,28,61,855/- paid on borrowed funds on the alleged ground that the said borrowed funds was not utilized for the purpose of business of the Appellant.
2. The appellant prays that the aforesaid disallowance of Rs.1,28,61,855/- be deleted.”
At the time of hearing before us, it is stated by the learned counsel that the Assessing Officer disallowed interest paid by the assessee on the ground that the borrowed money has been utilized for giving advances to the sister concern. He has stated that in the balance sheet under the head current assets, there is loan and advances to the tune of `66.83 crores, the breakup of which is given in Schedule-G which is at page 9 of the paper book. From the above Schedule, he pointed out that there is no loan and advances but it is mainly security deposit and advance payment of taxes and other expenses. He submitted that the assessee is in the business of subleasing of real estate i.e., office premises. That the above advances were given as security deposit for taking premises on hire. Therefore, all the advances are for the purpose of business. He also stated that the advances are not given to sister concern as stated by the Assessing Officer and the assessee had furnished the copy of lease agreement with the landlord, from which, it is evident that the advances were as per lease agreement and were not given to sister concern.
Learned Senior DR, on the other hand, stated that these facts need verification at the end of the Assessing Officer.
We have heard the arguments of both the sides and perused the material placed before us. From a perusal of Schedule-G of the balance sheet, it is evident that the major portion of loan and advances is in fact security deposits and some loan and advances are prepayment of taxes and other expenses. However, whether security deposit is for hiring of the premises or not needs verification. If the security deposit is made for taking any premises on hire which is being subleased by the assessee, then such deposit would be for the purpose of business. With this observation, we deem it proper to set aside the matter to the file of the Assessing Officer to be readjudicated in the light of our observation above. Needless to mention that the Assessing Officer will allow adequate opportunity of being heard to the assessee.
In the result, the appeal of the assessee is deemed to be allowed for statistical purposes. Decision pronounced in the open Court on 21.12.2017.