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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI INTURI RAMA RAO
Date of hearing : 31.01.2018 Date of Pronouncement : 28.02.2018 O R D E R
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred by the assessee against the order of the CIT(Appeals) inter alia on the following grounds:-
“1. The learned Assessing Officer had erred in passing the order in the manner passed by him and the learned Commissioner of Income tax (Appeals) has erred in confirming the same. The orders being bad in law and liable to be quashed. 2. In any case and without prejudice, the learned Assessing Officer had erred in disallowing the interest of Rs. 12,74,894/- and the learned Commissioner of Income tax (A) has erred in confirming the same. On proper appreciation of the facts of the case and the law applicable, the disallowance of interest as made / confirmed being erroneous is to be deleted.
3. The learned Commissioner of Income tax (A) has erred in confirming the disallowance of interest amounting to Rs. 12,74,894/- holding that a) out of above a sum of Rs. 4,59,252/- has not been disputed by the appellant. b) the balance sum of Rs. 8,15,642/- is not allowable u/s. 56(iii) of the Act. c) the said interest is not expended wholly for earning interest income. The various conclusions drawn are contrary both to facts and law is to be disregarded and disallowance of interest as confirmed is to be deleted.
The authorities below have not properly appreciated the facts of the case. The appellant having rightly claimed the deduction for interest paid and the same is to be accepted without any variation.
5. The appellant denies the liability to pay interest levied U/s. 234B and 234D of I.T. Act, 1961. The interest having been levied erroneously is to be deleted.
In view of the above and other grounds to be adduced at the time of hearing it is requested that the impugned order be quashed or atleast the disallowance of interest as made / confirmed be deleted and interest levied U/s. 234B and 234D of I.T. Act, 1961 be deleted.”
During the course of hearing, the ld. Counsel for the assessee has contended that neither the AO nor the CIT(Appeals) has appreciated the correct facts and has made a disallowance of the expenditure claimed by the assessee. In support of his contentions, the ld. Counsel for the assessee has invited our attention to the written submissions filed before the CIT(Appeals) in which it is categorically stated that he has made certain deposits to the bank and also took a loan from the bank which was later on disbursed to some of the debtors from whom assessee received the interest income. The assessee in fact claims the set off of interest expenditure against interest income received on the loans advanced to various parties, but the AO or the CIT(A) have not considered these facts and they have made the disallowance of the claim of expenditure having observed that the assessee is trying to adjust the interest expenditure against the interest income earned on FDRs. Since the claim of assessee was not properly examined by the lower authorities, the order of CIT(Appeals) be set aside in the interest of justice and may be restored to him for readjudication of the issue in the light of the assessee’s contentions.
The ld. DR, however, placed reliance upon the order of the CIT(Appeals).
4. Having carefully examined the orders of lower authorities in the light of rival submissions, we find that the AO/CIT(Appeals) have gone a different premise while disallowing the claim of assessee, whereas in the written submissions before the CIT(A), the assessee has tried to explain that his claim of adjustment of interest expenditure against interest income earned from the debtors to whom loan was advanced. In these circumstances, we are of the view that the contention of the assessee requires a fresh adjudication by the CIT(Appeals). Accordingly, we set aside the order of the CIT(Appeals) and restore the matter to his file with a direction to readjudicate the impugned issues after affording proper opportunity of being heard to the assessee and also after considering the written submissions filed by the assessee before the CIT(Appeals).
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 28th day of February, 2018.
Sd/- Sd/-
( INTURI RAMA RAO ) ( SUNIL KUMAR YADAV) Accountant Member Judicial Member Bangalore, Dated, the 28th February, 2018.