TaxTMI 
TaxTMI 
2021 (10) TMI 559
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....en set aside by ITAT. [B] The Ld. CIT (Appeals) erred in upholding the disallowance by merely relying on the Predecessor decision of earlier year i.e. 2012-13 and without considering the submission filed by the Appellant. 3. [A] The Ld. CIT (Appeals) has failed to consider the fact that there is an apparent mistake where disallowance on interest expenditure was computed double in the assessment order which has to be rectified u/s 154 of the l.T Act which was pointed out to A.O during the proceedings and which fact was not considered by the CIT (A). [B] The Ld. CIT (Appeals) further has also failed to consider the fact that 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 documen....
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....st expenditure incurred and income earned, The assessee did not accept the stand of the Assessing Officer and preferred appeal before Ld. CIT(A). Ld. CIT(A) dismissed the assessee's appeal for A.Y.2010- 11 and 2012-13 and upheld the additions made by the Ld. AOs. During the course of assessment proceedings, the AO asked the assessee to justify the nexus between interest paid and income earned as there was no business activity during the year. The AO therefore asked the assessee to show cause and explain why the entire interest payment should not be disallowed and added to the total income since assessee 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 Rs. 82,41,006/- and added it to the total income of the assessee. 5. Upon assessee's appeal Ld.CIT(A) noted the assessee submissi....
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....arent 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 Sect/on 154 would become redundant. Considering the totality of facts and the above discussion, the AO is not correct in refusing the rectification of the appellant." "ITAT held that in the figures set out in the assessment order are admittedly incorrect. Clearly, the Assessing Officer did not even apply his mind to the material on record. He did a simple cut and paste job from the 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....
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....xation benefits on the said transaction. Hence, the AO disallowed the claim of indexation benefit of Rs. 24,76,860/- and added it to the total income of the assessee. In this regard, the AO placed reliance on the decision of Hon'ble Apex Court in the case of Goetze (India) Limited Vs CIT (284 ITR 323) wherein it has been held that it is necessary for an assessee to revise its return of income for using any new claim which is not raised in the original return of income. 8. Upon assessee's appeal Ld.CIT(A) confirmed 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. 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 ca....
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....h says the issue involved with regard to eligibility of interest paid on loans taken by the assessee. The paper book filed by the assessee containing various details wherein it goes to prove that the loans were taken by the assessee in earlier years and accepted as genuine and interest paid on such loans were also allowed by revenue till A.Y 2009-10, The Appeal for A.Y 2010-11 has been filed and has been remanded to CIT (A). Pending decisions of subsequent previous years cannot deny that the nexus between interest paid and income earned was not genuine. Which has been already accepted by A.O and proved in earlier years to be genuine. Therefore, 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 just....
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....lacing Reliance on the following : * Bharat Enterprises, Mumbai Vs Department of Income Tai (1TAT Mumbai) "From the definition of capital asset it is evident that a business asset also comes within the category of capital asset like any non business investment asset. Unlike in the holding of non business investment asset, there are advantages or benefits accrued to in the holding of a business asset. The foremost is the depreciation allowance that can be claimed from the business income as a deduction. There are also other deductions .from the business income available to business assets like expenses on maintenance current repairs. Insurance, and interest on borrowed capital utilized for acquisition of the asset etc., as provided*(tm) 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 ....
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....he AY 2009-10 and preceding assessment year. After noting these facts, ITAT had remanded the matter to the Ld.CIT(A) for denovo adjudication. 13. Now in the present case, we note that AO in the assessment order has opined that assessee has incurred abnormally high expenditure as compared to income declared. This is an abstract observation without any figures given for comparison. Further, it has been mentioned that similar interest on loans taken from the parties were disallowed in earlier years as assessee has failed to prove the nexus between interest expenditure incurred and income earned. Further AO observed that assessee failed to justify the nexus of interest paid and income 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 yea....