TMI Blog2009 (3) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case. 3. In C.O. Nos. 9/Kol/2009 (ITA Nos. 1962/Kol/2008) and 10/Kol/2009 (ITA No. 1782/Kol/2008) and additional ground in ITA Nos. 1667/Kol/ 2008 and 1668/Kol/2008 both the assessees, Sri Om Prakash Chirania and Sri Rajib Chirania, L/H of Late Binod Kumar Chirania have taken the following common ground, which reads as under : For that scrutiny assessment had been made beyond time stipulated in Instruction No. 10 of 2004, dt. 20th Sept., 2004 and/or instruction of CBDT reported in [2000] 111 Taxman 325. 4. ITA No. 1667/Kol/2008 ITA No. 1668/Kol/2008; Asst. yr. 2004-05 (by Sri Om Prakash Chirania and Sri Rajib Chirania) 5. In these two appeals both the assessees have taken the following common effective grounds of appeal, which read as under : 1.For that the learned CIT(A) erred both in law and in fact by confirming disallowances of legal expenses of ₹ 3,28,500 which was exclusively incurred for the purposes of business without any basis and/or reasons. 2.For that the order is illegal, void ab initio and it seeks to violate the principles of natural justice. 3.For that the appellant craves l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow it is argued on behalf of the assessee before us that the necessary details/evidences in support of claims of litigation/legal expenses towards interest on FDRs shall be submitted before the lower authorities, if one more opportunity is given. Therefore, in the interest of justice and fairness, we restore the issue(s) to the file of the AO for re-examination of the claim of the assessee of litigation expenses to file the necessary details as desired by assessee in support of their claims. The grounds raised by the assessee in their respective appeals are allowed for statistical purpose. 11. In C.O. Nos. 9/Kol/2009 (ITA Nos. 1962/Kol/2008) and 10/Kol/2009 (ITA No. 1782/Kol/2008) and additional grounds in ITA Nos. 1667/Kol/ 2008 and 1668/Kol/2008 both the assessees, Sri Om Prakash Chirania and Sri Rajib Chirania L/H of Late Binod Kumar Chirania have taken the following common additional ground, which reads as under : For that scrutiny assessment had been made beyond time stipulated in Instruction No. 10 of 2004, dt. 20th Sept., 2004 and/or instruction of CBDT reported in [2000] 111 Taxman 325. 12. While pleading on behalf of the assessee the learned Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for scrutiny by CASS for which income-tax notification Instruction No. 10, dt. 20th Sept., 2004 is not applicable, which is clear from the para 6 of the said instruction reads as under : 6. In addition to the above, returns processed on AST will be settled through a Computer Assisted Scrutiny System (CASS). The selection criteria will be determined by the Board and the process, which will be run by the central system, will be completed in the first week of October, 2004. Separate instruction in this regard will be issued by the Directorate of IT (Systems). 15. After hearing both the sides at length, we find that the additional grounds taken in ITA Nos. 1667 and 1668/Kol/2008 and in C.O. Nos. 9 and 10/Kol/2009 are on the same issue. The facts of these appeals/cross-objections are completely different than the facts of the case relied upon. As far as the case of L/H Sri Rajib Chirania is concerned, we find that the return was selected for scrutiny by the CASS for which income-tax Instruction Notification No. 10, dt. 20th Sept., 2004 is not at all applicable, which is very clear from said para 6 of that Instruction. Keeping these facts in view, we find no merit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm have not been claimed or not found to have been made out of loans taken by the assessee. Therefore, the question of allowing interest on borrowed capital under s. 36(1)(iii) or s. 37 of the Act does not arise. Therefore, the learned CIT(A) was not justified in deleting the additions made by the AO on this issue. 19. While pleading on behalf of the assessee the learned Authorised Representative submitted the following : 19.1 The assessee had borrowed loans of ₹ 72,50,000 for the purpose of doing business of Haryana State Lottery in the financial year 1992-93 by establishing a partnership firm vide validly constituted partnership deed. Out of ₹ 72,50,000 and ₹ 70,00,000 was invested as FD with Dena Bank which was used as a bank guarantee having been provided conditionally for doing the said business. Balance of ₹ 2,50,000 was contributed as capital in the partnership firm. It was unfortunate that after running the business for about 3 months a dispute arose with Haryana State Lottery and despite all efforts to resolve the dispute ultimately the business was stopped and the bank guarantee was invoked by Haryana State Lottery. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and when it was so required. 19.5 At the end of the year under consideration i.e. 31st March, 2004 the balance of FD with accrued interest stood at ₹ 2,58,19,138 and TDS on FD interest ₹ 20,92,272 i.e., total FD interest comes to ₹ 2,79,11,410 ; in the same fashion loans payable along with interest stood at ₹ 2,40,14.087 being less than the balance of ₹ 59,42,561 which is invested in other assets as reflected in the balance sheet. 19.6 The question of allowing interest paid/payable out of the interest income on FD has already come up in the appellate proceedings in the case of appellant's petition in the same business and the Hon'ble CIT(A)- XIV vide his order dt. 24th Feb., 1999 was kind enough in passing the order in favour of the assessee on the ground that the interest paid/payable is for the purpose of an identical to the cause of investment in FD. The same question has again come up in the instant case along with one or two other questions with the facts and circumstances being almost similar to the proceeding case. 19.7 The learned Dy. CIT has mentioned in his order as follows : 19.8 In this connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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