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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Chandra Poojari, Accountant Member and Shri Soundararajan K., Judicial Member ITA No. 253/Coch/2023 (Assessment Year:2014-15)
Polakulath Narayanan Renai DCIT, Non Corporate Circle 1(1) Medicity C.R. Building, I.S. Press Road Main Road, Palarivattom vs. Kochi 682018 Kochi 682025 PAN – AAIFP7597B (Appellant) (Respondent) Assessee by: Shri Mathew Joseph, CA Revenue by: Ms. Swarnalatha, Sr.DR Date of hearing: 10.07.2024 Date of pronouncement: 05.08.2024 O R D E R Per: Soundararajan K.,J.M. This appeal filed by the assessee challenges the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 23.04.2023 in respect of Assessment Year (AY) 2014-15.
The brief facts of the case are that the assessee is running a hospital and during the assessment year the assessing authority had capitalised the interest component of the interior works for the reason that the work was done over a period of time and hence the interest till the completion of the work is to be capitalised. The Assessing Officer (AO) also capitalised the interest component on the capital asset i.e.on the Sewage Plant since the same was put into use at the fag end of the assessment year. The AO also treated the interest on fixed deposits as margin money under the head ‘income from other
2 ITA No. 253/Coch/2023 Polakulath Narayanan Renai Medicity sources’ instead of treating it as business income.The AO took into consideration the original return and made the assessment. The AO had not taken the revised return filed on 31.03.2016 in which an income of Rs 1,89,20,352 was shown as against the income of Rs 2,23,86,511 declared in the original return.The AO without considering the revised return had made the assessment by taking the income declared in the original return and therefore the difference income of Rs 34,66,159,being the claim of depreciation on the w.d.v of the capital asset, which was disallowed during the A.Y 2013-14, was claimed in the revised return. The assessee challenged the above said order of the AO before the CIT(A) and contended that the disallowance of interest and treating the same as capital in nature is not correct when the assessee is having interest free funds by way of partners capital. The assessee also disputed the disallowance of depreciation of Sewage Plant and the interest received on FDs and also raised additional grounds and contended that the AO had not allowed the set off of unabsorbed depreciation and not considered the deduction claimed on the capital asset depreciation as per the revised return filed by the assessee on 31.03.2016. Besides, the assessee also filed copies of Balance Sheet, Fixed Asset Schedule and Depreciation Statement as per the revised and original returns. The ld. CIT(A), without considering the revised return and the documents filed alongwith the additional grounds, had decided the appeal as if the assessee had not filed any supporting documents in support of the additional grounds raised by the assessee and dismissed the additional grounds. In so far as the other three grounds raised by the assessee, the ld. CIT(A) had accepted and allowed the same. As against the order of dismissal in respect of the two additional grounds, the assessee is in appeal before the Tribunal with the following grounds of appeal:- “1. The learned Commissioner of Income – Tax (Appeals) went wrong in law and in facts in approving the computation of income made in the assessment order passed on 11/11/2016 without taking in to account the revised return filed on 31/03/2016. He ought to have found that –
3 ITA No. 253/Coch/2023 Polakulath Narayanan Renai Medicity (i) The revised return was filed for claiming further depreciation of Rs.34,55,159 which became eligible on the basis of assessment order passed for the A.Y 2013-14 on a later date ie on 04/03/2016; and (ii) That the aforesaid return is a valid return u/s 139(5) and, as such, would step in to the shoes of the original return in all aspects.” 3. At the time of argument the learned A.R. of the assessee also filed a paper book comprising written submission and other documents such as the assessment orders for A.Y 2013-14,copies of the original as well as the revised returns and the screen shot of the I.T. Portal evidencing the filing of the returns and prayed to allow the appeal.
On the other hand, the learned D.R. relied on the orders of the lower authorities and prayed to dismiss the appeal.
We have heard the rival contentions and perused the material on record. The main argument made by the learned A.R. of the assessee is with regard to the additional grounds raised by the assessee and also the non-consideration of the documents filed before the CIT(A).We have perused paragraphs 6.19 to 6.23 in the order of the ld. CIT(A) wherein he had extracted the additional grounds raised by the assessee and dismissed the same for the reason that the assessee had not provided any supporting documents to verify the unabsorbed depreciation claimed by the assessee and also the other additional ground relating to the non consideration of the revised return filed after disallowance of deduction claimed u/s. 35AD of the Income Tax Act, 1961 (the Act) for AY 2013-14.
At page 7 of the CIT order, the CIT had extracted the additionalground as Nos. 4, 5 & 6, which is as follows:- “4. Additional ground (i). Levy of tax of Rs. 4,05,940/- on Rs.11,07,430/-. The unabsorbed depreciation determined in the scrutiny assessment order passed on 04/03/2016 for the A.Y 2013-14 amounting to Rs. 18,92,878/- was not set off u/s 32(2) while levying tax of Rs.4,05,940/- on Rs. 11,07,430/-, According to section 32(2) unabsorbed depreciation can be set off against any head of income.
4 ITA No. 253/Coch/2023 Polakulath Narayanan Renai Medicity 5. Additional ground (ii). Omission to consider the revised return. The revised return filed on 31.03.2016 is for valid reason as stated in the facts of the case above, It was in consequent to the disallowance made in the assessment for the A.Y 2013- 14 for which no appeal was filed. Hence the computation of total income of A.Y 2014-15 started with the income returned in the original return amounting to Rs.2,23,86,511/- is not in order. The computation should have commenced from the income returned in the revised return amounting to Rs.1,89,20,352/- 6. Copies of Balance sheet as at 31.03.2014, Fixed asset Schedule, and Depreciation Statement as per revised and original return are attached.” 7. After extracting the grounds and the attachments given by the assessee such as copies of Balance Sheet as on 31.03.2014, Fixed Asset Schedule and Depreciation Statement as per the revised and original returns, the ld CIT cannot dismiss the grounds by stating that the assessee had not provided any supporting documents. Further the assessee also filed proof to show that the revised return was filed on 31.03.2016.Therefore, we find that the order of the ld. CIT(A) is a wrong one and therefore, the same is liable to be interfered.
We, therefore, set aside the findings of the ld. CIT(A) in so far as the additional grounds 1 & 2 raised by the assessee are considered and remit the same to his file to decide the same afresh after granting personal hearing to the assessee and also after considering the documents filed in support of the additional grounds and in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 5th August, 2024.
Sd/- Sd/- (Chandra Poojari) (Soundararajan K.) Accountant Member Judicial Member Bengaluru, Dated: 5th August, 2024 n.p.
5 ITA No. 253/Coch/2023 Polakulath Narayanan Renai Medicity Copy to: 1. The Appellant 2. The Respondent 3. The CIT, concerned 4. The DR, ITAT, Cochin 5. Guard File By Order //True Copy// Assistant Registrar ITAT, Cochin