TMI Blog2011 (3) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly it was held that the Tribunal erred in law in setting aside the order of CIT (Appeals) on the alleged ground of concession which itself was incorrect – Appeal is partly allowed - ITA No. 270/2003 - - - Dated:- 17-3-2011 - Hon ble Mr. Justice Bhaskar Bhattacharya Hon ble Justice Sambuddha Chakrabarti Appellant: Mr. J.P. Khaitan. Respondent: Md. Nizamuddin. [Bhaskar Bhattacharya, J.]- This appeal is at the instance of an assessee and is directed against an order dated May 28, 2003, passed by the Income-tax Appellate Tribunal, A Bench, Calcutta, in Income-tax (Appeal) being ITA No.881/Cal/2002 for the assessment year 1997-98 thereby allowing an appeal filed by the Revenue in part with a finding that the assessee had no business connection with the alleged borrower in giving a loan by relying upon the alleged admission of the representatives of the assessee before the Tribunal. 2. Being dissatisfied, the assessed has come up with the present appeal. The facts giving rise to filing of this appeal may be summed up thus: (a) The assessee is a partnership firm deriving income from house property and profit and gain from business. During the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e variation in charging the interest was made by virtue of the agreement dated 28th February, 1997 purely on commercial consideration as the said borrower had undertaken to repay the principal before the 31st March, 2004 and also to pay to the assessee 2.5% of the net sale realization and/or 12.5% of net profit as stipulated in the agreement. (e) The Commissioner of Income-tax (Appeal) accepted the contention of the assessee that the said agreement was entered into on commercial consideration and there was no mala fide or collusion and the agreement dated 28th February, 1997 not to charge interest with effect from 1st April, 1996 before the interest accrued on 31st March, 1997 was permissible as held by the Supreme Court in the case of CIT vs. Shiv Prakash Janakraj Co. Pvt. Ltd., reported in 222 ITR 583. The CIT (Appeal), thus, deleted the said addition of interest done by the Assessing Officer. (f) The Department then preferred an appeal before the Tribunal. The Tribunal by the order impugned agreed with the Commissioner of Income-tax (Appeal) that the assessee had a reasonable cause for not filing the copy of the agreement before the Assessing Officer. However, after maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has come up with the present appeal. A Division Bench of this Court at the time of admission of the appeal formulated the following question of law: ( i) Whether the Tribunal exceeded its jurisdiction in entering upon the question of allowability of interest paid by the appellant on the moneys borrowed by it when the question before its was as to whether any deemed interest accrued to the appellant in respect of the loan advanced to the firm M/s. The Hamlet and its purported findings directing disallowance of interest paid are beyond the scope of the appeal filed by the Revenue? ( ii) In the event the answer to question No.1 is in the negative, whether the purported findings of the Tribunal that there was no business connection between the appellant and the said firm or that any such admission was made by the appellant s authorized representative or that the loan given to the said firm was not on business consideration or that borrowed money to the extent of Rs.1,09,94,298/- was not used by the appellant for the purpose of its business and directing disallowances of interest referable to the said sum of Rs.1,09,94,298/- are arbitrary, unreasonable and perverse? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st it by the litigant and if the Tribunal maintains that such a concession was made, the litigant should approach the higher forum challenging also the finding of the Tribunal that there was really any such concession. 6. In the case before us, immediately after the order passed by the Tribunal, the assessee moved such application through the selfsame representative asserting that he did not make any such concession. The Tribunal, however, did not enter into such question and dismissed the application for review on the sole ground that the same was not maintainable. Thus, it is apparent that in this case, the Tribunal did not dispute the assertion of the representative of the assessee that he did not make any such concession. In such a situation, we are unable to accept the contention of Mr. Nizamuddin, the learned Advocate appearing on behalf of the Revenue, that there was a concession of the assessee on an issue of fact before the Tribunal. In the case before us, we hold that as the Tribunal has not disputed the said allegation made against it, we should presume that no such concession was made on behalf of the assessee. 7. Apart from the aforesaid fact, we are of the vie ..... 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