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Sri Chaitanya Rice Mill Chelluru Versus DCIT Circle-1 Kakinada

Revision u/s 263 - Addition invoking the provisions of section 40(a)(ia) - Held that:- Since the assessee did not furnish any details with regard to interest paid to the creditors, the Assessing Officer was directed to obtain the details and to examine “afresh” at the time of giving effect to this order and “disallow proportionate interest which is attributable to the acquisition of capital assets”. As rightly pointed out by the assessee wherever the Revisional Authority thought fit to set aside .....

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a revenue expenditure. - While giving effect to the order, the Assessing Officer however, did not consider the issue as to whether it was capital or revenue expenditure. Since the specific direction of the ld. Commissioner was not followed by the Assessing Officer, the order of the ld. CIT(A) as well as Assessing Officer deserves to be set aside on this limited issue with a direction to the Assessing Officer to examine the nature of the expenditure and to disallow proportionate capital expe .....

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sing Officer by invoking the provisions of section 40(a)(ia) of the Act is the subject matter of dispute before the Tribunal. 3. The assessee-firm is engaged in the business of conversion of paddy into rice and sale of rice and its by-products. For the year under consideration, it declared a loss of ₹ 16,16,002/- and assessment was originally completed under section 143(3) on the total loss of ₹8,22,020/-. Thereafter, Revisional Authority set aside the assessment under section 263 of .....

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essee. 4. I am concerned herein with the claim of deduction of ₹ 52,28,927/- referable to interest paid to loan creditors; according to the assessee firm, the loans were taken for running of the business and capitalised the interest paid to the creditors before commencement of the business 5. On perusal of the profit & loss account, ld. Commissioner called upon the assessee to furnish the details in this regard. Since no such details were furnished, the matter was set aside with a dire .....

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taht loans were taken for the running of the business, and capitalised the interest paid to the creditors before the commencement of the business. The assessee did not furnish any details in this regard. The Assessing Officer is directed to obtain the details and the same needs to be examined afresh at the time of giving effect to this order and disallow proportionate interest which is attributable to the acquisition of capital assets. 6. While giving effect to the order of the ld. Commissioner .....

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om interest was paid without deducting tax at source which works out to ₹28,20,717/- and disallowed the same under section 40(a)(ia) of the Act. 7. Aggrieved, assessee contended before the ld. CIT(A) that the Assessing Officer erred in invoking the provisions of section 40(a)(ia) of the Act during the set aside proceedings since the direction of the ld.Commissioner was merely to consider as to whether the expenditure is revenue in nature and thus, the Assessing Officer could not travel bey .....

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ich includes applicability of TDS provisions and disallowance of section 40(a)(ia) of the Act. 9. Further aggrieved, assessee is in appeal before the Tribunal. 10. Learned counsel adverted my attention to the order of the Revisional Authority and in particular referred to para 14.1 to submit that wherever the Assessing Officer was to invoke the provisions of section 194A read with section 40(a)(ia) a specific direction was given by the ld. Commissioner which is conspicuously absent with regard t .....

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thority:- a) DCIT Vs. Prescon Builders (P) Ltd. [171 TTJ 788 (Mumbai)] b) Cawnpore Chemical Works Pvt. Ltd. Vs. CIT [197 ITR 296 (All.)] 11. On the other hand, Learned Departmental Representative strongly relied upon the orders of the tax authorities. 12. I have carefully considered rival submissions and perused the record. 13. Ground Nos. 1 to 5 are general in nature and therefore, need not require independent consideration. 14. Ground No.4 is with regard to Form No. 15G from the creditors. In .....

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