TMI Blog2012 (11) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... iate from the principle of consistency – in favor of assessee - ITA No. 1603/Del/2011 - - - Dated:- 13-1-2012 - SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA, JJ. Appellant by : Shri R.S. Negi Sr. DR Respondent by : Dr. Rakesh Gupta Adv. Sh. Ashwani Taneja Adv. ORDER PER R.P. TOLANI, J.M : This is Revenue s appeal against CIT(A) s order dated 24-1-2011, relating to A.Y. 2007-08. Following grounds are raised: 1. On the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and on the facts in deleting the addition of Rs. 4,29,098/- made by the AO on account of business expenses claimed. 2. On the facts and on the circumstances of the case, the Ld. CIT(A) has erred in law and on the facts in deleting the addition of Rs. 32,05,602/- made by the AO on account of interest paid to corporation Bank as financial charges. 2. Learned DR relied on the order of AO. 3. Learned counsel for the assessee, on the other hand, contends that assessee is in the business of sale of hospital furniture under the name and style of Mobi Care . During the year in question, assessee claimed business expenditure from this supply of hospital equipmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings it was realized by the assessee that the said amount of interest was to be claimed against the house property income and not from the business income, where it was debited. Therefore, as a matter of abundant caution a revised return was filed, making a proper claim of deduction of this interest against the house property income, being the interest paid for acquisition of the property. AO disallowed this claim on the ground that this could not be allowed in revised return, relying on Hon ble Supreme Court judgment in the case of Goetze India Ltd. 283 ITR 284 ITR 323. AO further observed that the assessee s claim was mala fide to reduce the income. 3.3. Aggrieved, assessee preferred first appeal, where it was pleaded that- the immovable property at Shop No.14-E (G.F.), Connaught Place, New Delhi (carpert area 1721 sq.ft.; built-up area 1918 sq.ft.)-- viz. Rs.75,60,000 (including stamp duty of Rs.5,60,000) towards purchase of the property from Raghubir Saran Charitable Trust vide sale deed dated 19th August, 2004 and Rs.5,63,89,741 under the following heads [as per MOU dated 16th September, 2004 with the existing tenant, M/s. Uberoi Limited] for acquiring vacant possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer has arrived at an unexplainable conclusion that the 'Purpose' as stated in the Bank's sanction letter does not indicate that it was for acquiring a property. The Learned Assessing Officer has obviously misread the facts of the case and led himself to incorrect conclusions which are factually and legally unjustified. Besides the above explained loans from Corporation Bank the appellant HUF had also raised loans from friends and relatives- - almost all of which were interest free. The aggregate unsecured loans (as per the Consolidated Financial Statements) as at 31st March, 2007 amounted to Rs.3,39,70,335 which included interest bearing loan from only one party viz. from Suman Prints Pvt. Ltd. and the amount of the same as at 31st March, 2007 was Rs.25 lakhs. As at 31st March, 2007 the appellant HUF had given LOANS ADVANCES of Rs.6,29,11,818.61 (as per the Consolidated Financial Statements). It was explained that a major portion of the same (viz. RsA,11,93,741 - as per details below) pertained to the investment in the immovable property acquired at 14E (Ground Floor), Connaught Place, New Delhi:- (a) Advance against property Uberoi Ltd. Rs. 3,81,48,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 120 TTJ 116 (Indore Bench) and Emerson Network Power India Pvt. Ltd. vs. ACIT 122 TTJ 67 (Mumbai Bench). Further, the Jurisdictional High Court in the case of CIT vs Bharat Aluminum Co. Ltd. 163 Taxman 430 has clearly permitted making revised claim during the course of assessment proceedings as in accordance with law and which should be entertained by the Assessing Officer to determine the correct income. Therefore, the action of the Assessing Officer in rejecting the revised computation is not as per law. Further, the Assessing Officer has attempted to make out a case that funds borrowed on interest have been used for non- business purposes and therefore, proceeded to disallow the corresponding interest debited in the Profit Loss Account. However, the facts of the case as detailed in the revised computation are quite contrary to what has been projected by the Assessing Officer so much so that there is clear evidence available on the record that funds borrowed from the bank have been directly used to purchase the property at Connaught Place, for which rent is being received to the tune of Rs. 8 lacs per month. The claim of the assessee that interest expenses have to be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undamental aspect pre-meeting through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the decision to be changed in a subsequent year particularly in absence of any material change justifying the revenue to take a different view of the matter and if there is no change, and it was in support of the assessee, it will not be appropriate to re-open the issue and to decide it contrary. Therefore, findings substance in the argument of ld. AR that in view of principle of consistency the reassessment proceedings for the year under consideration should have also been dropped. Therefore, on the short ground, we see no justification in upholding the validity of reassessment proceedings. Therefore, not going into the other aspects of the matter, which will be of academic in nature, we decide the appeal filed by the assessee in favour of assessee. 4. We have heard rival contentions and gone through the entire material available on record. Apropos ground no. 1, AO raised suspicion about the expenditure incurred for assessee s busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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