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TMI Blog2020 (4) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on facts & in law in not giving a reasonable & suf ficient opportunity while assessing the income of the appellant at Rs. 1,45,57,210/-. 3. The CIT(A) failed to appreciate that the appellant had correctly offered his income & that no disallowance of expense was called for to the returned income. (B) Disallowance of interest expenses of Rs. 1,24,07,347/- 4. The learned CIT-(A) erred on facts and in law in disallowing the interest expenses of Rs. 1,24,07,347/- claimed against interest income. 5. The appellant prays that the disallowance of Rs. 1,24,07,347/- made by the learned CIT(A) may be deleted & returned income of Rs. 21,49,860/ - may be accepted. 6. The learned CIT(A) fai led to appreciate that the appel lant had correctly offered his income & that no addition was called for to the returned income. (C) General 7. The above grounds of appeal are without prejudice to one another and the appellant craves leave to add, alter, amend, delete or modify any of the above grounds of appeal." Apart from that, the assessee has also sought the leave of the Tribunal for raising the following additional grounds of appeal: "(A) Without prejudice not allowing interest u/s. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had during the year also deployed part of the interest bearing funds amounting to Rs. 20 crore for a period of 7 months i.e from 16.04.2012 to 31.10.2012 by way of interest bearing deposits with the bank, therefore, the A.O worked out the pro rata interest expenses relating to the aforesaid funds which were utilised by the assessee for executing the FDR with the Bank at Rs. 1,73,70,287/-. On the basis of his aforesaid observations, the A.O restricted the assesses claim for deduction of interest expenditure to the extent of Rs. 1,73,70,287/- i.e to the extent the interest bearing funds were utilised for earning of interest income during the year under consideration. Consequently, the balance amount of interest expenditure of Rs. 1,24,07,347/- [Rs. 2,97,77,635/- (-) Rs. 1,73,70,287/-] was disallowed by the A.O within the meaning of the provisions of Sec.57(iii) of the Act. In the backdrop of his aforesaid deliberations, the A.O assessed the income of the assessee company at Rs. 1,45,57,207/-. 4. Aggrieved, the assessee assailed the assessment order before the CIT(A). It was submitted by the assessee before the CIT(A) that as the interest bearing borrowed funds raised from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to the remaining 4 parties viz. (i) M/s Atiti Builders and Constructors Pvt. ltd.; (ii) Ayyappa Developers Pvt. Ltd.; (iii) M/s Crystal City Mall Pvt. Ltd; and (iv) Rikki Ronie Developers, it was submitted by the ld. A.R that the assessee in the normal course of its business had given advances to the aforesaid parties for booking of the under construction properties in their projects. In order to fortify his aforesaid claim, the ld. A.R had drawn our attention to the correspondence of the assessee with some of the aforementioned parties at Page 88 - 93 of the assesses "Paper book‟ (for short "APB‟). Accordingly, the on the basis of his aforesaid contentions it was the claim of the ld. A.R that the CIT(A) was in error in not appreciating the contentions of the assessee in the right perspective. 7. Per contra, the ld. Departmental Representative (for short "D.R‟) relied on the orders of the lower authorities. It was submitted by the ld. D.R that as the assessee had diverted part of the interest bearing funds for giving interest free loans/advances to third parties, therefore, the lower authorities had rightly disallowed the assesses claim for deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the amounts which were advanced by it to 5 parties viz. (i) Aristo Shelters Pvt. Ltd; . (ii) M/s Atiti Builders and Constructors Pvt. ltd.; (iii) Ayyappa Developers Pvt. Ltd.; (iv) M/s Crystal City Mall Pvt. Ltd; and (v) Rikki Ronie Developers. On a perusal of the records, we find that the amount of Rs. 72,81,370/- reflected against M/s Aristo Shelters Pvt. ltd. pertains to the interest that was recoverable by the assessee from the said party. The assessee had way back in the month of December, 2010 given an interest bearing loan aggregating to Rs. 25 crores to M/s Aristo Shelter Pvt. Ltd. Although, the aforesaid principal amount of loan was received back by the assessee in F.Y. 2011-12, but the amount of the interest of Rs. 72,81,370/- had remained unpaid during the year and was subsequently received in the immediately succeeding year i.e on 09.10.2013. The aforesaid factual position can safely be gathered from a perusal of the copy of the account of M/s Aristo Shelter Pvt. Ltd. as appearing in the "books of accounts‟ of the assessee company at Page 93 of the APB. In our considered view, as the amount of Rs. 72,81,370/- that was recoverable by the assessee during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to raise an additional ground before the appellate authorities not merely in terms of legal submissions, but also additional claims to wit claims which were not made in the return of income filed by it. Accordingly, we are of the considered view that the CIT(A) ought to have considered the assesse‟s claim for deduction of the interest expenditure under Sec.36(1)(iii) of the Act, specifically, when the same was being raised on the basis of the facts which were already available on record. As such, we are unable to persuade ourselves to concur with the declining on the part of the CIT(A) to consider the assesse‟s claim for deduction under Sec. 36(1)(iii) of the Act. Adverting to the merits of the claim of the assessee as regards its entitlement for deduction of the interest expenditure under Sec. 36(1)(iii) of the Act, we find, that it is the claim of the ld. A.R that as the aforesaid funds were deployed by the assessee in the aforesaid concerns in the normal course of its business, therefore, the correlating interest expenditure in respect of the same was allowable as a deduction under Sec.36(1)(iii) of the Act. In fact, the ld. A.R in order to drive home his claim ..... 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