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2017 (1) TMI 1254 - AT - Income TaxAllocation of proportionate expenditure - Held that:- We do not agree with the contention of the learned counsel of the assessee to accept the allowance of pro rata expenses towards the short term income(s), due to the following reasons: i. that in the first round of proceeding, the claim of allowance of pro rata expenses towards short term income(s) was not accepted by the Tribunal and the matter was restored to the Assessing Officer to identify expenses towards each of the short term income. ii. that the Assessing Officer has not followed the finding of the Tribunal while passing the order in compliance to direction of the Tribunal. iii. that the learned Commissioner of Income Tax (Appeals) has also not taken into consideration the direction of the Tribunal and allowed the relief to the assessee, which was not approved by the Tribunal in first round of proceeding. iv. that the lower authorities are bound to follow the direction issued by the Tribunal and cannot act according to their wish or choice, while complying the direction of the Tribunal. v. that the direct expenses like interest etc. are prima facie not allowable against the lease income etc. on prorata basis. The interest expenses incurred for borrowing funds was required to be examined by the Assessing Officer from terms and conditions of money borrowed. If same were incurred exclusively for long term borrowing, then no interest expenses was required to be allocated against short term income from fixed deposit in banks or inter corporate deposits etc. The Assessing Officer was required to examine all these issues, which he has not done. In view of above, we feel it appropriate to restore the matter back to the file of the learned Commissioner of Income Tax (Appeals), who is directed to follow the direction of the Tribunal given in the first round of proceedings and decide the issue accordingly after giving sufficient opportunity of hearing to the assessee. The grounds of appeal raised by the Revenue are allowed for statistical purposes. Allocation for expenses other than direct expenses towards short-term income - Held that:- We agree with the finding of the learned Commissioner of Incometax (Appeals) that the main activity of the assessee was for earning from long-term finance and, therefore, allowing proportionate expenditure was not justified. In our opinion, the estimation of ₹ 25 lakh towards the short-term income by the learned Commissioner of Income-tax (Appeals) is most reasonable and justified. In our opinion, the order of the learned Commissioner of Income-tax (Appeals) on the issue in dispute is well reasoned and no interference on our part is required, accordingly, we uphold the finding of the learned Commissioner of Income-tax (Appeals) on the issue in dispute and the ground of the cross objection of the assessee is rejected.
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