TaxTMI 
TaxTMI 
2017 (9) TMI 1349
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....e into account that the loan of Rs. 70 crores taken to implement Voluntary Separation Scheme (VSS) was for the entire company as a whole and not for any particular unit. Hence the disallowance of interest expense of Rs. 14,87,50,000 is unlawful and unwarranted. 4. The learned CIT (Appeal) has erred in coming to the conclusion that the units which were closed were forming part and parcel of the appellant company and have common management, common finance and above all, the balance sheet is prepared as one balance sheet for different units under the same management. 5. The learned CIT (Appeal) had erred in disallowing an amount of Rs. 50,53,640 and Rs. 1,22,99,765 as interest on working capital loan holding it to be attributable to 7 closed units of the assessee which is highly condemnable. 6. The learned CIT (Appeal) while making this disallowance had completely ignored the fact that the loan was secured by the corporate office. He has further mis- interpreted tests laid down by the apex court in CIT v Prithvi Insurance Co. to arrive at a wrong conclusion that all units were separate but actually there exist interlacing with common management and common funds. Accordingly, ....
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.... is contended that the computation of income is wrong and bad in law. 19. It is contended that the tax calculations are wrong and require revision. 20 The above grounds are independent and without prejudice to one another." Condensed grounds of Appeal 1. As per Point No. 1 to 6 of the original grounds of appeal, the Learned CIT(A) have erred both on the facts and in law in confirming the disallowance of the interest to the extent of Rs. 16,61,03,405/-. It is against the natural justice and wrong application of the facts. The Ld. CIT(A) while making this disallowance had completely ignored the fact that the loan was secured by the corporate office. There exist a interlacing with common management and common fund. Interest on working capital cannot be bifurcated towards the running units and the closed units. 2. As per Point 7 to 12 of the original grounds of appeal, the Learned CIT(A) had erred in enhancing the income of the appellant by way of taxing capital gain on the assumption that there was a transfer within the meaning of section 2(47). Further Ld. CIT(A) has no jurisdiction to assess a new source of income which is not disclosed either in the return of income o....
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....it." 7. Keeping in view the facts that additional grounds raised by the the assessee, though for the first time before the Tribunal, are allowed as the same are merely question of law which can otherwise be taken care of by the Tribunal, the application for additional grounds is allowed. Ground No.1 :- 8. Undisputedly AO has disallowed interest of Rs. 19,40,28,714/- and thereafter Ld.CIT(A) allowed interest of Rs. 2,79,25,309/- and the assesse company is before the Tribunal for the balance disallowance of Rs. 1,66,03,405/-. 9. The first contention raised by Ld.AR for the assessee is that a major component of the interest claimed by the assessee viz Rs. 14,87,50,000/- is on account of loan taken from the Govt. in the year 2000-2001 for making the payment to the employees under voluntary retirement scheme (VRS). There is no dispute that the principal loan of Rs. 70,00,00,000/- was taken by the assessee. AO merely disallowed the interest on the sole ground that the interest claimed does not pertain to the existing business of the assessee as the assessee is continuing with only one unit i.e. BFF unit. 10. In the backdrop of the aforesaid facts and circumstances the question aris....
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....s. 1,661,03,405/- by determining the ground No. 1 in favour of the assessee company. Ground No. 2 and additional ground No. 1,2 14. Undisputedly neither assessee company has made claim of capital gain in its return of income nor A.O. has made any addition on account of capital gain. Ld. AR for the assessee contended that the Ld. CIT(A) has no jurisdiction to make addition on account of capital gain and relied upon Full Bench decision rendered by Hon'ble Delhi High Court in the case cited as : CIT vs. Sardari Lal and Co. (DHC Full Bench) 251 ITR 864 (Delhi) 15. So the first legal question arises for determination in this case "as to whether Ld. CIT(A) was empowered to make addition of Rs. 92,52,933/- on account of long term capital gain particularly when A.O. has not made any such addition by considering the issue in question." 16. Hon'ble Delhi High Court in judgment CIT vs. Sardari Lal & Company (Full Bench) 251 ITR 864 while deciding the identical issue held as under :- "Looking from the aforesaid angles, the inevitable conclusion is that whenever the question of taxability of income from a new source of income is concerned, which had not been considered by the....