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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM Shri Suresh Trevadia
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A)- Mumbai dated 17/03/2017 for A.Y.2010-11 in the matter of order passed u/s.143(3) of the IT Act dated 28/03/2013. 2. In this appeal assessee is aggrieved for disallowance of interest expenditure. 3. Following grounds have been taken by the assessee.
1. On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) erred in upholding the assessing officer's action of disallowing interest expenses of Rs.11,43,082/- out of payment made of Rs.56,03,7337- u/s 57(iii) of the act and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under.
2. On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) erred in not adjudicating the ground by Shri Suresh Trevadia stating that the working of fund utilization is an additional evidence and the same cannot be entertained u/s 46A and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under. 3. The Appellant craves leave to add to, amend, alter or delete any of the above grounds of appeal on or before the date of hearing.
Rival contentions have been heard and record perused.
Facts in brief are that assessee is an individual deriving income from house property, business income, capital gains and income from other sources. During the course of scrutiny assessment, the AO observed that assessee has earned interest income of Rs. 30,09,656/- against which it has incurred interest expenditure of Rs.56,03,733/-. The AO worked out average interest of 11% on the loan given, accordingly he disallowed interest expenditure of Rs.11,43,082/-. 6. By the impugned order, CIT(A) confirmed the disallowance. 7. I have considered rival contentions and carefully gone through the orders of the authorities below and found that AO has disallowed interest, by applying average method of interest on the funds advanced by assessee. However, the assessee has furnished fund flow statement, wherein interest was computed as per the fund flow method. However, the CIT(A) has not accepted the fund flow method on the plea that it is an additional evidence and the same cannot be entertained under rule 46A. However, I do not find any merit in the contention of learned CIT(A) in so far as all the facts and figures with regard to the date, the amount of loan, rate of interest were very much before the lower authorities. The assessee