TMI Blog2018 (8) TMI 1756X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, even if the details filed by the assessee were considered by the AO but if the same are not examined in the context of allowability of the claim under section 57(iii), then the case would certainly fall in the category of complete lack of enquiry on a particular issue of allowability of the claim of interest expenditure under section 57(iii) - the details revealed that the assessee has received the interest @ 12% from M/s. Vishal Agencies, the partnership firm as against the interest charged by the same firm from the assessee @ 18%, hence there is a difference of 6% in the interest received and paid by the assessee. All these aspects were not even examined by the AO. there is no bar for considering the audit objections by the ld. Pr. CIT if the audit objection reveals certain relevant and crucial facts about the allowability of the claim. Therefore, no merit in the contention of the A/R on this point as it is clear that it is a case of lack of enquiry particularly on the issue of allowability of the claim under section 57(iii) of the Act. Thus the order of the AO suffers from error so far as it is prejudicial to the interest of the revenue. CIT has rightly invoked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed his return of income on 30th July, 2013 declaring total income at ₹ 11,96,470/- and losses of the current year to be carried forward ₹ 1,57,580/-. The AO completed the assessment under section 143(3) on 10th February, 2016 accepting the returned income declared by the assessee. Subsequently on examination of the record, the Principal CIT found that the order passed by the AO is erroneous and prejudicial to the interest of the revenue due to lack of making proper enquiry/examination in respect of the deduction on account of interest paid amounting to ₹ 19,26,409/- as against interest receipt of ₹ 6,08,668/- resulting in loss of ₹ 13,17,741/- which was allowed by the AO. Further, the balance sheet of the assessee reflects increase in unsecured loans amounting to ₹ 1,44,63,110/- and the genuineness of these loans were not supported by any evidence. Thirdly, an advance of ₹ 10,00,000/- has been shown in the balance sheet to one Shri Banwari Lal Meena but the details of interest received do not reveal any income received from him. Similarly, the assessee has shown loan repayments to Shri Kapoor Chand Jain of ₹ 8,50,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. Thus once the AO has taken a possible view, then the ld. Pr. CIT cannot invoke the provisions of section 263 merely because he did not agree with the view taken by the AO. The ld. A/R has also referred to the details of the interest paid by the assessee as well as the interest received from various parties as well as the partnership firm in which the assessee is a partner and also from the company in which the assessee is a director and thus it is clear that the assessee was earning interest from the partnership firm on the capital in the partnership which is declared as income under Chapter-5D as business income. The interest paid against the said income is claimed as business expenditure whereas the interest paid in respect of the loan amount used for giving advances and loan which is offered to tax as income from other sources was claimed under section 57(iii) of the Act. The ld. A/R has referred to the computation of total income and submitted that the assessee has properly bifurcated the interest income and receipt from the partnership firm against the capital of the assessee as business income and, therefore, the expenditure to the extent of the borrowed fund introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on record. The case is discussed with him. The assessee is partner in M/s. Ajanta Plastic Industries and M/s. Vishal Agencies and has shown interest from these firms. The assessee is deriving salary from M/s. Nangalwala Impex Pvt. Ltd and M/s. Zibaa Builders Pvt. Ltd. Apart from these, the assessee has declared income from house property, capital gain and income from other sources. During the year under consideration the assessee has earned income from above said sources as mentioned. After examining relevant details/documents and after discussion returned income of ₹ 12,05,000/- as declared by the assessee is hereby accepted. Assessed u/s 143(3) of the Income Tax Act 1961. The Income Tax computation form generated from the software system of the department, giving therein the details of tax, interest, credit for prepaid taxes etc., forms part of this order, is attached herewith. Sd/- ( Asmita Pathak ) Income-tax Officer, Ward 1(1), Alwar. Place : Alwar Dated : Thus it is clear that the AO accepted the returned income in the summary proceedings whereas there are multiple transactions of loans taken by the assessee as well as given by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll amounts in Rupees) Name of person from whom money borrowed Opening balance as on 01.04.2012 Amount borrowed/ repaid during the year (+ -) Balance Interest paid for the year Rate of interest Amit Jain 2,00,000 - 2,00,000 24,000 12% Ashok Kumar Jain 20,00,000 - 20,00,000 2,40,000 12% Bombay Electricals 5,00,000 5,00,000 - 58,500 12% Ganpati Traders 10,00,000 - 10,00,000 1,20,000 12% Kranti Chand Jain HUF 2,00,000 - 2,00,000 24,000 12% Kranti Chand Jain 2,00,000 - 2,00,000 24,000 12% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the assessee were considered by the AO but if the same are not examined in the context of allowability of the claim under section 57(iii), then the case would certainly fall in the category of complete lack of enquiry on a particular issue of allowability of the claim of interest expenditure under section 57(iii) of the Act. Further, the details revealed that the assessee has received the interest @ 12% from M/s. Vishal Agencies, the partnership firm as against the interest charged by the same firm from the assessee @ 18%, hence there is a difference of 6% in the interest received and paid by the assessee. All these aspects were not even examined by the AO. Further, there is no bar for considering the audit objections by the ld. Pr. CIT if the audit objection reveals certain relevant and crucial facts about the allowability of the claim. Therefore, we do not find any substance or merit in the contention of the ld. A/R on this point as it is clear that it is a case of lack of enquiry particularly on the issue of allowability of the claim under section 57(iii) of the Act. Thus the order of the AO suffers from error so far as it is prejudicial to the interest of the revenue. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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