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2018 (3) TMI 890

he directors or whether the TDS was deducted on that or not, and has not sought any detail as to whether the loans were utilized for the purpose of construction at 3, Kapashera Estate, the rented property or the other property at 3A, Kapashera Estate - Held that:- There was no want of enquiries on the part of the Ld. assessing officer and as a matter of fact all the relevant material was submitted before the Ld. CIT also. However, without adverting to the circumstances and material pleaded by the assessee, Ld. CIT has recorded a finding that the AO has not called for and taken on record all the necessary details of the Ld. assessing officer has not even examined the bank statements of the assessee company to see whether the interest was pai .....

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of ₹ 20,23,641/- in respect of the interest payable u/s 24(b) of the Act, but the learned AO has not obtained and placed on record any details of documents on that aspect. Further, according to the ld. PCIT copies of the ledger account of unsecured loans from related parties do not show any credit entry of any interest amount to their accounts. Ld. PCIT doubted the admissibility of claim of interest against the rental income and also recorded that it was not clear from the record whether the loan amount was utilized for carrying on construction on the related property or adjacent property. 4. After hearing the assessee, ld. PCIT reached a conclusion that the assessment framed by the ld. AO is erroneous and prejudicial to the interest .....

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ch an order shall be deemed to be erroneous insofar as it is prejudicial to the interest of revenue. Since the impugned order was passed on 8.3.2017, the amended provision is applicable to the facts of this case. Basing on this he submitted that AO should have satisfied himself with reference to the material on record that the loan amount was used for the construction of the rented house and the reason for not showing the income from the other property, but the ld. AO did not make any enquiries or verification on this aspect which had a bearing on the tax liability of the assessee. Further, the ld. AO did not make any enquiry in respect of the bank statement of the assessee company to find out whether the interest was paid to the directors .....

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credited to TDS payable account and a payee account only checks are made out for the balance payable and all these entries are verifiable from the bank statement of account submitted by them. It is also stated therein that they have enclosed the bank statement for the ready reference. It is further submitted that all relevant details/explanations had been placed before the Ld. assessing officer and that the property belonging to the company at Kapashara is a single property which has for the convenience been divided by the assessee, the interest-free loan from M/s relationship private limited pertains to the portion 3A, Kapashara estate and interest-bearing loans pertains to the rented portion 3, commercial real estate and the interest the .....

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ld. AR it was submitted before the ld. CIT(A) that as per accounting practice the interest paid is not credited to the ledger account but was directly debited to the interest paid account and the TDS deducted is credited to the TDS payable account. When we look at this submission of the assessee, as recorded by the ld. PCIT vide paragraph no.6(i) of his order and in the light of the TDS statements and the bank receipts, it does not leave any doubt in our mind that there is no non examination of bank statement of the assessee for verification of payment interest to the directors or that it is prejudicial to the interest of the revenue. As a matter of fact, all these documents along with the audit reports are available before the authorities .....

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