TMI Blog2014 (7) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Interest expenses u/s 14A r.w. Rule 8D of the Act – Held that:- There is no discussion about the examination of the details furnished by the assessee, particularly the Capital account copy of the assessee in the firm M/s Nathalal Shivlal on which the reliance is placed by the assessee, has not been examined by CIT(A) - there is also transfer of funds to the Partnership concern from M/s Shreeji Textiles - the contention of the assessee requires critical examination - one can accept the claim of the assessee that the investment has been made out of own funds only after examination of the relevant money transactions - the AO has made the disallowance without considering the submissions of the assessee – thus, the matter is to be remi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune of ₹ 1,71,891/- and administrative expenses to the tune of ₹ 13,295/-. The AO further noticed that the interest income declared by the Assessee did not match with the ITS details filed by the Assessee i.e. interest income from two parties viz; M/s Harkishan Textile Mills Pvt.Ltd and M/s Charanjitsingh Udhamsingh Gora was not fully accounted for by the Assessee. The difference between the interest income shown in the ITS details and that accounted by the assessee was ₹ 40,663/-. The Assessee submitted that the above said two parties have stopped paying interest and have also not returned back the principal amount and hence in view of the non-receipt of interest income cited above, it was not declared in the return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he did not make use of any borrowed interest bearing funds for making the above said investment and hence the Ld CIT(A) was not justified in confirming the disallowance of part of interest expenditure. The ld. Counsel further submitted that the AO made disallowed interest expenditure for identical reasons in the succeeding assessment year i.e., in assessment year 2009-10, but the first appellate authority has deleted the same by giving a finding that the impugned investment was made out of own funds. In support of the above said contention, the ld. Counsel for the assessee placed before us a copy of order dated 2.7.2013 passed by CIT(A)-24 in the assessee s hand in appeal No.CIT(A)-24/JCIT(OSD) 13(1)/158/11-12. The ld. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership firm cited above and also his Capital account copy in the said Partnership Concern. A perusal of the Capital Account Copy shows that the Capital account of the assessee has been debited with the following amounts:- Financial Year Description Amount 1.4.05 to 31.3.06 Shares Business transaction 17,62,077.72 1.4.06 to 31.3.07 Shares Investment A/c Rajvir Ind. Ltd 94458 8,96,959.26 The aggregate of both the amounts shown above works out to ₹ 26,59,036.98. The assessee has also attached copies of bank account of the partnership firm to show that the above said withdrawals have been made fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the contentions of the assessee with regard to the usage of own funds and take appropriate decision in accordance with the law. 8. The next issue relates to the assessment of interest income. According to the assessee, the two debtors referred earlier have paid interest up to August 2007 and the same has been duly declared by the assessee. However, the said parties have stopped paying interest thereafter and hence the assessee did not account for the same. It was also submitted that the debtors have not paid back the principal amount also till date. However, both the debtors have accounted for the interest payable to the assessee for the period from Sep., 2007 and further they have also deducted TDS from the same. Hence the ITS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is following mercantile system of accounting. The assessment order also shows that the assessee is following mercantile system of accounting. We also notice that the assessee, during the course of assessment proceeding, has accepted for the assessment of difference amount of interest on the condition that no penalty should be levied for concealment. There should not be any dispute that the assessment of income under the Income tax Act is not dependent upon the acceptance or otherwise of the assessee. Any income assessable in the hands of an assessee is liable to be so assessed, even if the assessee objects to the same. Similarly, any income which does not belong to the assessee or which cannot be assessed in his hands, cannot be asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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