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TMI Blog2023 (11) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153C/143(3) of the Act which is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, Hon'ble CIT (A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153C r.w.s. 143(3) of the Act and without complying with the mandatory conditions u/s 153B and 153D as envisaged under the Income Tax Act, 1961. 4. That having regard to the facts and circumstances of the case, Hon'ble CIT (A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in making an addition of Rs. 41,44,372/- on account of disallowed of interest paid on CC account without any basis. 5. That having regard to the facts and circumstances of the case, Hon'ble CIT (A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in making an addition of Rs. 1,59,20,750/- by rejecting the claim of assessee with respect to the brought forward losses in the return filed in response to notice 153C. 6. That the appellant craves the leave to add, modify, amend or delete an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation the addition was made u/s 2(22)(e) related to deemed dividend such shares invested by the assessee to the company where he has the substantial interest. This particular investment is reflected in the books of account of the assessee. There is coherent relation in between company and assessee. The counsel of the assessee filed an additional ground which is under adjudication. The ld CIT-DR vehemently opposed& pointed out that assessee had never taken this additional ground anywhere before the any of the lower authorities. The acceptance of additional ground was not in question in Rahul Mittal, supra case. We accept the additional ground in light of judgment of Rahul Mittal, supra, respectfully considering the judgment of Hon'ble Apex Court in the case of NTPC vs. CIT (1998) 229 ITR 383 (SC). The additional ground of the assessee is accepted related assessment U/s 153A of the Act and the appeals of the assessees are allowed. 7. In the result, In ITA No. 86/Asr/2017, ITA 320 to 326/Asr/2017, 276/Asr/2019 & 277/Asr/2019 ITA 583 to 585/Asr/2019 ITA 151/Asr/2021, ITA 183/Asr/2021 and ITA 41 to 43/Asr/2022 are allowed." 7.1 It is mentioned in written submission that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er years i.e. preceding years should be allowed to assessee. Addition of Rs. 41,44,372/-: Sir, is submitted that assessee is a firm engaged in the business of purchasing milk, preserving it in its chilling plants and selling the same to large retailers as well as marketing of milk and milk products. Sir, it is submitted that Ld. AO further disallowed the interest expense claimed by assessee stating on page 6 para 4 of the assessment order that ".....During the course of assessment proceedings u/s 153C of the Act for the past years, it was noticed that major part of the funds were utilised and remained blocked in investment in immovable properties, which were not utilised any time for the business of the assessee and upon advances to entities with which there was no direct or indirect business dealing. The assessee himself has not claimed any interest relating to such advances in the past and kept the same as unexplained interest. Since the assessee was not able to justify the utilisation of funds for the purpose of business, keeping in view the facts that about 60% of the balance in the CC limit remain locked up in unproductive assets and that there were some interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee firm. 2. That all these immovable assets are utilized for the business of the assessee firm in the relevant year. 3. That Ld. AO on the assumption and presumption basis made adhoc disallowance of Rs. 41,44,372/- by holding that this additional interest on CC limit was required to be capitalized as cost of acquisition of immovable properties, without considering the fact that these were utilized for the business of the assessee firm. 4. That in the Assessment order and appellate order it is stated that assessee has utilized funds and these funds remained blocked in immovable properties, in this regard it is stated that all the properties of assessee firm is already disclosed in the books of accounts and are very well utilized for the business purpose as per modus operandi explained above. In both the orders it is not clearly stated that which immovable asset is not utilized by the assessee firm and as per assessee firm all the properties are business assets which are fully utilized for the purpose of business only. Thus, disallowance of interest expense should be made in the hands of assessee concern. Sir, in this regard reliance is placed on the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xman 206 (SC). Consequently, the civil appeals filed by the assessee are allowed with no order as to costs." We respectfully relied on the order of Vardhman Polytex Ltd.(supra). The disallowance of 50% interest has no basis. The use of land purely business purpose. The ld DR was not able to submit any contrary judgment against the assessee. So, the appeal order related this issue is setting aside. We quash the addition amount to Rs. 41,44,372/-. Hence, the ground no. 4 is allowed. 9.1 Considering the above discussion, the earlier years losses are carry forwarded to the impugned assessment year. The order of the ITAT is in favour of assessee related AY 2012-13, 2013-14 & 2014-15. So, the carry forwarded loss is eligible for deduction subject rectification of preceding years. In point of verification and for calculation we remand back the issue to the file of the ld. AO for allowing the carry forwarded loss of the assessee as per the law. Therefore, the ground 5 is duly remanded back to the file of the ld. AO for verification of the loss claimed by the assessee and the eligible carry forwarded loss should be allowed as per the law. The reasonable opportunity should be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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