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2023 (7) TMI 646 - ITAT MUMBAIRevision u/s 263 - claiming business expenditure while claiming standard deduction in the rental income - CIT observed that, assessee has declared rental income and also maintenance charges which is the common source income and also common expenditure - since there is no record on the assessment record to show that Assessing Officer has verified the claim of the assessee CIT issued notice of revision - HELD THAT:- We observe that assessee has filed the detailed submissions before CIT that assessee has already declared all the material facts necessary for completion of assessment in the return of income as well as in the computation of income. Assessee submitted that in computation of income wherein voluntary disallowance is made under the head income from business - The details of these voluntary disallowance, as required, are now filed herewith. These expenditures were pertaining to income from house property were disallowed under the head business income and the same were claimed under the head “income from house property” Therefore there is no prejudicial to the interest of the Revenue. The assessee has explained to the Ld. Pr.CIT that assessee has segregated the expenditure claimed for income from house property in which assessee is claiming standard deduction, accordingly, the relevant expenditure was voluntarily disallowed while computing the income from business and the expenditures which are relevant for the business expenditure were claimed. Therefore, there is absolutely no additional expenditure claimed by the assessee. No doubt assessee has claimed the voluntary expenditure under the head income from business. However, on a perusal of the various submissions made before CIT we observe that CIT has not brought on record any loss to the revenue except by observing that the submissions of the assessee itself clearly shows that Assessing Officer has not verified the same. Accordingly, he invoked the Explanation 2(a) to provisions of section 263 of the Act incorrectly. Interest paid to partners - As fact on record that assessee has paid interest @18% to the related parties and which comes under the provisions of section 40A(2)(b) - At the same time, we observe that assessee has also taken several loans from unrelated parties and paid interest in the range of 12% to 18% to unrelated persons. With regard to related parties assessee has paid standard rate of 18%. We also observed that all these informations were submitted before the Assessing Officer (as per the declaration made before us in the Paper Book) it clearly shows that assessee has paid various rate of interest to unrelated persons the average may come to less than 18%, however, it maintains to pay @18% to the related parties.Therefore, as per the principle of consistency the rate adopted by the assessee should be accepted. We have considered the submissions carefully and we observe that there is no whisper of any discussion in any of the Assessment Orders submitted by the assessee on the aspect of payment of excess interest to the related parties, that means, in none of the AY Assessing Officer has not verified this aspect of additional payment of interest to the related parties much above the industry average or average interest rate to the assessee itself. Therefore, merely accepting the submissions made by the assessee without there being any evidences on record to show that AO has actually verified or enquired on this aspect. The submissions by the assessee before us does not show any evidence that AO has actually verified the above said aspect. Therefore, we are inclined to accept the revision proceedings with the observation that the AO has not verified on this aspect of interest payment to related parties itself makes the revision proceedings proper. Decided partly in favour of assessee.
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