TMI Blog2018 (12) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITAT CHENNAI) also considered a similar situation in which the amount of insurance claim was less than the amount of actual expenditure incurred on reconstruction/ renovation and it was held that no short term capital gain u/s. 45(1A) of the Act can be charged under such circumstances. Validity of assessment - no notice u/s.143(2) was validly served - Held that:- We are confronted with a situation in which the assessee did raise objection before the AO during the course of assessment proceedings itself that the notice was not properly served upon him. However, the AR of the assessee appearing before the AO, gave his ‘no objection’ for furthering the assessment proceedings. When the second limb of the ld. AR not objecting to the continuation of assessment proceedings despite service of notice on the assessee’s manager is considered in conjunction with the first limb of the assessee initially objecting to the service of notice, the inference which follows is that the assessee did raise objection initially but withdrew the same before the AO. In such a scenario, the initial objection stood withdrawn by the later ‘no objection’ tendered before the completion of the assessment, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledger account of interest which transpired that there was payment of interest of ₹ 11,72,341/- and also receipt of interest amounting to ₹ 7,55,692/-. The net amount of interest paid in excess of interest income was claimed as deduction. The assessee explained that it re-started its cold storage on 16-03-2010 and for that purpose it borrowed certain funds on which such interest was paid. The AO disallowed the deduction of interest amounting to ₹ 3,17,318/- on the premise that the amount of loan was utilised for the purposes of creating of an asset and consequently interest on such loan was not deductible . The ld. CIT(A) overturned the assessment order on this point, against which the Revenue has come up in appeal before the Tribunal. 4. Having heard both the sides and gone through the relevant material on record, it is noticed that the assessee s cold storage was destroyed by fire and it had to reconstruct/ renovate the same. For that purpose, it arranged certain loans on which the impugned interest was paid. The AO has disallowed the interest by treating it as relatable to creation of capital asset, which in our considered opinion, is not a correct positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1,35,50,851/- chargeable to tax. The ld. CIT(A) deleted the disallowance by relying on an order passed by the Mumbai Bench of the Tribunal in the case of J .R. Enterprises Vs. ACIT (2009) 24 DTR 311 and also another order of the Chennai Bench of the Tribunal in Chemfab Alkalis Ltd. (IT No.563/Mds/2012) dated 24-08-2012 . The Revenue is aggrieved by the deletion of addition. 7. Having heard both the sides and perused the relevant material on record, it is observed that the assessee received insurance claim of ₹ 1.35 crore on account of land and incurred actual expenditure on renovation/re-construction of ₹ 3,55,56,948/-. The Mumbai Bench of the Tribunal in J .R. Enterprises (supra) has held that the provisions of section 45(1A) of the Act are inapplicable because of the receipt of insurance claim of ₹ 1.57 crore against the actual expenditure incurred of ₹ 3.82 crore. The Chennai Bench of the Tribunal in Chemfab Alkalis Ltd. (supra) also considered a similar situation in which the amount of insurance claim was less than the amount of actual expenditure incurred on reconstruction/ renovation and it was held that no short term capital gain u/s. 45(1A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pawar stated that he has no objection . This shows that, firstly, the notice was addressed to the assessee firm and served upon its Manager, who was available at that time at the address of the assessee-firm and secondly, the assessment was completed with due participation of the assessee. Under these circumstances, a question arises as to whether service of notice u/s. 143(2) on the Manager of the assessee firm would invalidate the assessment proceedings? In our considered opinion, the answer to this question needs to be given in negative alone. 13. Section 292BB of the Act, which is relevant for our purpose reads as under : Notice deemed to be valid in certain circumstances.- Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- ( a ) not served upon him; or ( b ) not served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment proceedings, thereby debarring it from raising any objection of improper service of notice before any proceedings under the Act, including the Tribunal. 16. The ld. AR relied on the judgment of Hon ble Supreme Court in the case of Himalayan Cooperative Group Housing Society Vs. Balwant Singh (Civil Appeal Nos. 4360-61 of 2015) to contend that the concession given by the Authorised Representative before the AO had no legal legs to stand on and the same cannot bind the assessee. Facts of the Himalayan Cooperative Group Housing Society (supra) are that the appellant-society in that case raised a demand on its members for payment towards allotment of residential quarters/apartments on 28-05-1998. The respondents failed to comply with the demand. The appellant-society, after following the due procedure, passed a resolution expelling the respondents from the membership of the society. The resolution required confirmation of the Registrar of Cooperative Societies, who approved the resolution but gave one more opportunity to the respondents to pay their outstanding dues. No such payment was made and the resolution got confirmed. As a result, the respondents ceased to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y concession made by the ld. Authorised representative and personally call upon the assessee to make concession in every case. The ld. AR could not draw our attention towards any decision under the income-tax proceedings in which the concession given by the ld. AR was successfully challenged by the assessee before the higher court on the ground that such concession by the ld. AR was invalid. In view of the foregoing discussion, we are of the considered opinion that there is no merit in the grounds raised by the assessee in this regard, which are hereby dismissed. 18. Ground No. 4 of the assessee s appeal is for expunging certain remarks made by the ld. CIT(A) in his order. 19. Having heard both the sides and gone through the relevant material on record, we find that the ld. CIT(A), after dismissing the assessee s ground of non-service of notice u/s.143(2), also made certain remarks about the ld. ARs advising them not to raise frivolous grounds of appeal and verifying the facts doubly before filing Form No.35. In our considered opinion, such remarks were not called for. It is the duty of every appellate authority to consider the issue raised before it and decide the same rathe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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