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TMI Blog2019 (12) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... y of 3 days on the part of the Revenue in filing this appeal is therefore condoned and the appeal of the Revenue is being disposed of on merit. 3. The assessee in the present is a company which is engaged in the business of development, construction and leasing of commercial properties. The return of income for the year under consideration was filed by it on 29.09.2013 declaring a total income of Rs. 2,35,02,500/-. During the course of assessment proceedings, a revised computation of income was filed by the assessee claiming a deduction of Rs. 3,60,72,409/- on account of interest paid on the borrowed funds. In support of this claim, it was submitted on behalf of the assessee company before the AO that the deduction on account of interest was not claimed in the return of income originally filed as it was capitalised to the cost of investment made in the unquoted shares. It was submitted that the said treatment to the interest expenditure was wrongly given due to inadvertence and ignorance of law and since the investment in shares did not fall under the definition of a "qualifying asset" for such capitalisation, the interest expenditure was being claimed as a deduction in the revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectfully submits that it made investment in subsidiary companies as the same was commercially expedient. The Appellant submits that when the investment was made for commercial expediency interest paid on borrowed funds for such investment is wholly allowable under section 36(1)(iii) of the Act. In support of the aforesaid contention the Appellant Company refers to and relies on the Judgment of Hon'ble Supreme Court in the case of S. A. Builders Ltd. vs. CIT(A), Chandigarh [2007] 158 TAXMAN 74 (SC) equivalent to 288 ITR 1 (SC). The Hon'ble Supreme Court held that when the investment in subsidiary or sister concern is commercial expedient interest payment on loans borrowed for such investments are allowable deduction under section 36(1)(iii) read with sec. 37(1) of the Act. The Appellant Company further relies on the judgment of the Hon'ble Bombay High in the case of CIT vs. Reliance Communications Infrastructure Ltd. [2012] 21 taxmann.com 118 (Bom), wherein the Hon'ble High Court following the aforesaid judgment of the Hon'ble Supreme Court in S. A. Builders Ltd. (supra) held that no disallowance of interest could be made under section 36(1)(iii) of the Act as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and respectfully submits that in view of the aforesaid facts and the judicial decisions on the subject, the suo moto disallowance of Rs. 3,60,72,409/- made by the Appellant should be allowed as deduction since the same was not required to be capitalised and are in the nature of business expenses. The AO considered the submission of the appellant company and was satisfied but did not allow the same on the ground that no revised return was filed by the assessee and therefore the additional claim could not be entertained in view of the judgment of the Hon'ble Supreme Court in case of Goetze India Ltd vs. CIT in 284 ITR 323. The Appellant company most humbly and respectfully submits that it had not filed a revised return of income because by the time it realised that the amount of Rs. 3,60,72,409/- was not required to be capitalised and was in the nature of allowable business expenses, the time prescribed under the Act for submission of revised return had expired. The appellant company further submits that it shall not be penalised on having paid tax in terms of his return, on account of ignorance, on an income not eligible to tax. The Appellant Company also submits that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time prescribed under the Act for submission of revised return had expired. The appellant company further submits that it shall not be penalised on having paid tax in terms of his return, on account of ignorance, on an income not assessable to tax. He has also cited a number of judicial decisions in his favour. There is no dispute that the appellant can made a fresh claim before the Higher Authorities like CIT(A) and ITAT even if the claim has not been made in a revised return. The decision of the Apex Court in Goetze India (supra) only circumscribe the power of the AO to accept any fresh claim made unless through a revised return does not denude the powers of the appellate authorities which includes CIT(A) and ITAT. This view has been upheld by th'e various courts as follows: (i) Delhi High Court in PCIT vs Westem India Shipyard Ltd [2017) 88 Taxmarur.com 448 (Delhi), (ii) CIT vs Pruthvi Brokers and Shareholders (P) Ltd 2012 349 ITR, (iii) National Thermal Power Vs CIT [1998] 229 ITR 383 (SC) (iv) CIT Kolkata-Ill vs Britannia Industries Ltd 83 Taxmann.com 365 (Calcutta) However, the next issue is whether interest paid on loan which is utilized for investment in sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee before the ld. CIT(A), the interest expenditure in question was incurred by the assessee in respect of the borrowed funds which were utilised for making investment in shares of its subsidiary company namely, M/s. Bengal Intelligent Parks Pvt. Ltd. As further explained on behalf of the assessee company, M/s. Bengal Intelligent Parks Pvt. Ltd. was also engaged in the similar business as that of the assessee of development, construction and leasing of commercial properties. Reliance was placed by the assessee on the decision of Hon'ble Bombay High Court in the case of Reliance Communications Infrastructure Ltd. (supra) wherein investment was made by the assessee company in its subsidiary company and since both the assessee and subsidiary company were engaged in a similar business of providing telecommunication services, it was held that the funds were deployed as a matter of commercial expediency and to further the business of the assessee. Accordingly interest paid on the borrowed funds utilised for making an investment in subsidiary company was held to be an allowable expenditure by the Hon'ble Bombay High Court by relying on the decision of Hon'ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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