TMI Blog2021 (10) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... s to why the entire interest payment should not be disallowed and added. After putting this issue in the order sheet that question was issued to the assessee, there is no mentioned as to whatsoever was the reply of the assessee. The AO simply says that in earlier years the disallowance was done and assessee had not made cogent or convincing explanation, hence the AO disallowed the amount of interest paid to these parties. Thus without any application of mind, the authorities below are passing orders year after year for reason best known to them when assessee has given the necessary details and no disallowance was done in earlier years as noted by the Tribunal. Without any change in facts and circumstances and without any application of mind, the revenue authorities are going on making the additions in abstract manner without bringing on record, cogent material. Such a relinquishment of statutory duties cannot be rewarded by remitting the matter for fresh inning every time. In this view of the matter, in our considered opinion, the orders of the authorities below shows complete lack of application of mind and in the background of aforesaid discussions, we are inclined to set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O did not respond to the application of rectification made by Appellant. Which is bad in law. 4. The Ld. CIT (Appeals) erred in confirming the disallowance of Indexation benefit without considering the vary fact that sale consideration of Shop No. 1 was shown under profit from business income and at the same time this transaction has also been shown as capital gains in the Computation of Income. 5. The Ld. CIT (Appeals) erred stating that there was absence of complete facts whereas have failed to consider the documents filed in the Paper Book which clearly showed the facts. 3. Brief facts of the case are that assessee company is engaged in the business of investments in securities and real estate. It e-filed its return of income for A.Y.2016- 17 on 17.09.2016 declaring total income at ₹ 64,48,309/-. The return was processed u/s.143(1) of the Act. Subsequently, the case was manually selected for scrutiny under compulsory selection criteria. Accordingly, statutory notices u/s. 143(2) and 142(1) were issued and duly served on the assessee through ITBA portal. In response to the aforesaid notices, the assessee made submissions from time to time. The AO completed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had failed to prove the nexus. Since the facts of the case were similar to the facts for the year under consideration were similar to the facts, circumstances and events of the case of A.Y.2010-11, 2011-12, 2012-13, 2013-14 and 2014-15, Ld. CIT(A) upheld the additions made by the AO in A.Y.2010-11 and 2012-13 and since assessee had not made any cogent or convincing explanation, hence the AO disallowed the amount of interest paid to these parties of ₹ 82,41,006/- and added it to the total income of the assessee. 5. Upon assessee s appeal Ld.CIT(A) noted the assessee submissions as under:- Disallowance u/s.36(1)(ii) of interest expenditure ₹ 82,41,006/- i)The Ld. AO has failed to consider that the Appellant had incurred an expenditure on account of interest on various loans. The AO has also failed to observe that the assessee had made advance loans to the directors and sister concern company which were for business purpose and out of that advances they have earned interest income. The Appellant has also borrowed loan advances from other sources from which they have incurred interest expenditure. Therefore, the Appellant has provided all accounts deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of taxable income filed by the assessee. The starting point of his computation of income was incorrect, he accepts it but still fights shy of giving effect to the natural corollaries of discovering this mistake, if there is a mistake, it is to be rectified. There cannot be any justification of Assessing Officer's inertia in this respect. The same is the position with respect to the depreciation figure, and the same is the stand of the Assessing Officer. 6. However, Ld.CIT(A) did not deal with the submission and held as under:- I have carefully considered the facts of the case, discussion of the AO in the assessment order, written submission of the appellant and material available on record. An identical issue had come up for consideration in appellant s own case in AY 2012-13 and the same has been decided by my learned predecessor CIT(A) vide order bearing No.CIT(A)-6/IT-62/2015-16 dated 29.07.2016 by observing as under: 4. I have carefully considered the facts of the case, the appellant has not made any submissions despite adequate opportunities granted to it. As stated by the AO, similar disallowance made in A.Y.2010-11 was accepted by the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, written submission of the appellant and material available on record. The appellant in this case seeks to claim benefit of indexation on a property sold during the year. It claims the sale taken place to be that of the tenancy right in the Shop No.1. The AO .n the assessment order has clearly mentioned that the sale of asset and consideration thereof of Shop No.1 has been shown by the assessee in the income-tax return filed under the head Profit from Business Income . If the sale consideration is part of the assessee's business income there cannot be any case of taking such consideration to have been generated from the sale of assets held as investment by the assessee. Further thereto, no facts or any further details have been mentioned or submitted during the course of appellate proceedings but for the submission which has been reproduced at para 7.2 above. The opportunities granted and the response thereto of the assessee has been clearly mentioned at para 4 of this order and for reasons best known to the assessee, the adequate compliance bringing out complete facts regarding the case have not been submitted. It is further observed that the AO has also placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the disallowance made by A.O is bad in law and must be deleted. Rectification u/s'154 ii) Here, It is submitted that the Appellant, at time of hearing before the A.O has pointed Out the mistake in the assessment order which has to be rectified u/s 154 of the I.T Act. The Appellant has written letter for the rectification of the mistake where the disallowance on interest expenditure was wrongly computated. There was no response or action by A.O on the rectification of the error in assessment Order. The A.O cannot be justified in rejecting the Application of the Assessee made u/s 154 for rectification of the apparent mistake. iii) Reliance is placed on following : ACIT Vs Rupam Impex (ITAT Ahemdabad) CIT (A) reversed the order of AO. It was held that the AO has completely erred by not rectifying such mistakes which were clearly apparent very well from records in appellant's case. The mistakes were so glaring that the AO was not even required to look or verify any other document. If such kind of typographical or clerical mistakes are not rectified, the provisions of Section 154 would become redundant. Considering the totality of facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on borrowed capital utilized for acquisition of the asset etc., as provided* section 30 to 43D in the computation of the business income. The benefits to business assets are also available throughout its holding period. For non business investment asset no such deductions are available from income to which it has been applied. But for non business investment long term assets. The benefits of indexation on cost of acquisition and cost of improvement are provided in section 48. v) Here, According to section 50 if the assets has been held for a period of more than 36 months. The benefit of indexation and benefit of lower rate applicable to the long term capital gain will be available. Hence, the Appellant has held the Assets beyond time limit and is eligible for the benefit of indexation on cost of acquisition. Hence, this Addition is bad in law and against the principle of natural justice. Reliance placed on following: Prabodh Investment Trading Company Vs Assesee (31 January 2007) (ITAT Mumbai) In the present case there is also no dispute that the flat under consideration was purchased by the assessee in the year 1987. It was thus held for a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come earned as there was no business activity during the year. This again is an abstract observation in contrast to the earlier observation that there was income declared by the assessee. AO further mentioned that assessee was asked to explain as to why the entire interest payment should not be disallowed and added. After putting this issue in the order sheet that question was issued to the assessee, there is no mentioned as to whatsoever was the reply of the assessee. The AO simply says that in earlier years the disallowance was done and assessee had not made cogent or convincing explanation, hence the AO disallowed the amount of interest paid to these parties amounting to ₹ 82,41,006/-. 14. Upon assessee s appeal, Ld.CIT(A) passed even a further laconic order showing complete absence of application of mind as above. He mentions that AO had made a similar disallowances in AY 2010-11 and assessee has accepted and no appeal was preferred on the issue. However, as noted in the facts hereinabove matter for AY 2010-11 had travelled to the ITAT and ITAT firstly favorably observed that assessee has given all the details proving the nexus and that up to earlier year, no disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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