TMI Blog2018 (10) TMI 1910X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.04.2018 narrated hereinbefore, we set aside the order of the Ld. CIT(A) Disallowance of interest expenditure on notional basis - HELD THAT:- We keep in mind that where an additional evidence has been allowed to be adduced, the interests of justice demand that the other side must be given an opportunity to explain or rebut such additional evidence as clarified in the decision in Smt. Urmila Ratilal [ 1981 (6) TMI 25 - GUJARAT HIGH COURT] ; Hiralal Devdutt Jagadhri [ 1980 (2) TMI 282 - PUNJAB AND HARYANA HIGH COURT] We set aside the order of the Ld. CIT(A) and remit the matter relating to the 3rd and 4th ground of appeal to the file of the AO to make a de novo order as per the ratio laid down in Madhav Prasad Jatia [ 1979 (4) TMI 2 - SUPREME COURT] and Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the AO. - ITA No. 6686/MUM/2016 - - - Dated:- 31-10-2018 - SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) Appellant by : Mr. Anuj Kisnadwala, AR Respondent by : Mr. Manoj Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold flats/units and added sum of ₹ 1,55,07,727/- under the head Income from House Property after giving deduction @ 30% u/s 24(a) of the Act. 4. Aggrieved by the order of the AO the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) relied on the decision in Ansal Housing Finance Leasing Co. Ltd. (supra) and observing that the facts in the case of the appellant are identical to the facts in the above case, confirmed the addition of ₹ 1,55,07,727/- made by the AO. 5. Before us, the Ld. counsel of the assessee files a Paper Book containing the judgement of the Hon ble Gujarat High Court in CIT v. Neha Builders P. Ltd. 296 ITR 661 and the order of the ITAT Mumbai in the case of Runwal Constructions v. ACIT (ITA Nos. 5408/Mum/2016 and 5409/Mum/2016 dated 22.02.2018), ITO v. Arihant Estates Pvt. Ltd. (ITA No. 6037/Mum/2016 dated 27.06.2018), C R Developments P. Ltd. v. JCIT (ITA No. 4277/Mum/2012 dated 13.05.2015), Sarang Property Developers Pvt. Ltd. v. ACIT (ITA No. 5620/Mum/2016 dated 26.06.2015). The Ld. counsel relies on the above decisions. 6. Per contra the Ld. DR relies on the decision in Ansal Housing Finance Leasing Co. Ltd. (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2nd grounds of appeal. 8. The 3rd and 4th ground of appeal 3. The Ld. CIT(A), erred in law on facts in confirming order of the Assessing officer in respect of disallowance of interest expenditure to the extent of ₹ 2,26,46,285/- out of total interest paid of ₹ 85,16,24,163/-on notional basis. 4. The appellant prays that the order passed u/s. 143(3) disallowing interest expenditure of ₹ 2,26,46,285/- is bad in law should be quashed. 8.1 The Ld. counsel of the assessee has also filed a letter requesting for admission of additional evidence under Rule 29 of the ITAT Rules, 1963. It is accompanied by a Paper Book containing (i) chart showing details of loans given, (ii) balance sheet and profit and loss account for the year ended 31.03.2005, 31.03.2007, 31.03.2009 and 31.03.2010. It is stated by him that the entire loans and advances of ₹ 13,32,13,440/- were granted in earlier years. It is further stated that in each of the years in which the loans were advanced by the assessee, it had sufficient interest-free funds available with it to cover the amount of loan advanced by it. In this regard, reliance is placed by him on the decision in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessee and relying on the decision in the case of Punjab Stainless Steel Inds (2011) 324 ITR 396 (Del) held that interest paid u/s 36(1)(iii) is allowed in respect of capital borrowed for the purpose of business and profession for commercial expediency and thus disallowed proportionate interest expenses of ₹ 2,26,46,285/- on notional basis. 10. In appeal, the Ld. CIT(A) held that the assessee had failed to prove that it had interest-free funds available with it as on the date of advancing interest-free loans to sister concerns and close relatives. Further, it also failed to establish that such loans and advances were given for commercial expediency. Thus the Ld. CIT(A) dismissed the appeal filed by the assessee. 11. Before us, the Ld. counsel of the assessee relies on the decision in Reliance Utilities Power Ltd. (supra) and the documents contained in the Paper Book filed along with application for admission of additional evidence. On the other hand, the Ld. DR strongly supports the order passed by the Ld. CIT(A). 12. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decision are given below. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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