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TMI Blog2023 (1) TMI 1428X X X X Extracts X X X X X X X X Extracts X X X X ..... - Rs. 1.44 crore c) Disallowance of depreciation - Rs. 4.26 lakhs d) Addition of increase in liability - Rs. 1.16 crore e) Non-granting to set off of brought forward losses. 2. The assessee is engaged in the finance and leasing business. The present assessment was completed by the Assessing Officer under section 144 read with section 254 of the I.T. Act, since the entire assessment was restored to the file for AO for framing assessment afresh. The Assessing Officer was constrained to complete the assessment to the best of his judgment since the assessee did not cooperate with the Assessing Officer. Accordingly he completed the assessment by determining total income at Rs. 1,39,14,000/-, as determined in the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to the income of the year under consideration. 5. The Learned AR also submitted that the hire purchase rental of Rs. 18.06 lakhs is to be received from M/s. Datar Switchgear Ltd., whose agreement has expired in August, 2000 itself. Hence there was no right to receive any hire rentals during the year under consideration. The Lease rental of Rs. 6.54 lakhs was receivable from M/s. Electrex (India) Ltd., whose agreement has expired in April, 2001. He further submitted that both these accounts have become classified as non-performing assets (NPA) and hence no income could be recognised by the assessee as per accounting standard-7, as there is no certainty of receipt of money from the above said two parties. Accordingly, he praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the order passed by the learned CIT (A) on this issue and direct the Assessing Officer to delete this addition. 8. The Next issue relates to disallowance of expenses of Rs. 1,44,87,000/- The Learned AR submitted that the major component of this expenditure to the tune of Rs. 141.39 lakhs relates to interest expenditure only. Out of the above said amount, a sum of Rs. 131.34 lakh is interest payable to the banks and the remaining amount of Rs. 10.04 lakhs is the interest payable on public deposits. All these interest is payable on opening balances of outstanding loans. Accordingly, he submitted that there is no reason to suspect the interest expenditure to the tune of Rs. 141.39 lakhs and hence no disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance of depreciation assets covered under sale and leased back transaction would apply only in the cases where seller of assets and lessee are one and the same person. If the seller of asset and lessee are two different persons, then depreciation is not required to be disallowed. He submitted that this view has been expressed by the Coordinate Bench in assessee's own case in ITA No. 2826/Mum/2017 and CO No. 247/Mum/2018 dated 28.9.2018. The Learned AR submitted that the above said depreciation relates to an asset which was purchased from one party and leased out to another party. Accordingly, he prayed that the disallowance of depreciation be deleted. 14. We heard Ld DR on this issue and perused the record. The propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the unsecured loan of Rs. 59.92 lakhs, the Ld A.R submitted that the loan of Rs. 21.45 lakhs was taken from Akash Farms P. Ltd. And the loan of Rs. 73.39 lakhs was taken from Akash Enterprises. The learned AR submitted that the assessee has filed confirmation letters obtained from these parties. 17. We heard learned DR on this issue and perused the record. In the earlier paragraph we have confirmed the disallowance of expenses of Rs. 144.87 lakhs. We noticed that the increase in secured loan and the increase in outstanding expenses are on account of the above said expenses only. Since we have confirmed the disallowance of expenses, in our view, making addition of increase in liability of Rs. 20.32 lakhs and Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow set off of brought forward losses after verifying the past records. The Learned AR submitted that the Assessing Officer has not given effect to this order of the learned CIT (A) till date and hence the assessee has raised an additional ground seeking direction from the bench to the AO to allow set off of brought forward losses. He submitted that it is only a legal ground and the AO is required to grant set off of brought forward losses as per law. Accordingly he prayed that the Assessing Officer may be directed to give effect to this order of the learned CIT(A). 20. The Learned DR submitted that the assessee is raising this ground for the first time before the Tribunal and hence this should not be admitted. 21. We heard the rival s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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