Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (7) TMI 103 - AT - Income TaxValidity of revisionary order passed u/s 263 - order revised on ground that interest bearing funds has been utilized for non-business purposes - assessee, a partnership firm, had shown payment of interest to partners of Rs.72,65,894/- on their current accounts, and had made investment in non business asset viz residential building to the tune of Rs.5,84,60,738/-- Held that:- In the present case, though the AO had made certain enquiries, but such glaring feature of the balance sheet was not confronted to the assessee. Such an assessment which has been made without taking into account the position of the outstanding balances as shown in the balance-sheet and the related consequence on the profit disclosed as per the P&L account can give rise to an automatic suspicion that an erroneous order has been passed causing prejudice to the Revenue. Revisionary powers u/s.263 has rightly been invoked - Decided against assessee. Dis-allowance of proportionate interest expenditure on the ground of interest bearing funds have been utilized for non-business purpose - Held that:- The only explanation of the assessee was that the building used for the purposes of the business as well as for the purpose of providing stay for partners. But simultaneously, this fact has also been brought on record that the said building was not treated as a business asset because the assessee has not claimed depreciation on the same. Thus a nexus has been established the non-business assets have factually been funded from the current accounts of the partners. Further, assessee has not discharged its primary onus to prove that entire interest-bearing funds including partners’ capital account were entirely used for the purposes of the business. Dis-allowance made upheld - Decided against assessee.
|