TaxTMI 
TaxTMI 
2023 (2) TMI 790
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.... 2. The assessee has raised the following grounds: "1. The learned Commissioner of Income Tax erred in holding that the order of the AO was erroneous and prejudicial to the interests of the revenue. The order of the assessment was passed by the Income Tax Officer was after full inquiry and the decisions of appellant authorities. 2. Without prejudice ground no. 1, the learned Commissioner of Income Tax erred in relying on amendment to section 263 by Finance Act 2015. The case of the appellant related to A.Y. 2013-14 and the amendment is not applicable to A.Y. 2012-13. 3. As transpires from the order of the Ld. PCIT, the assessment order passed in the case of the assessee under section 143(3) of the Act for the impugned y....
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....e books of the assessee amounting to (-)Rs.13,85,90,715/-. The ld.PCIT was of the view that the assessee had diverted bank loan for non-business purpose and noting that out of the total interest debited to profit & loss account of Rs.1,10,83,468/-, the assessee himself has disallowed Rs.98,76,033/- under section 43B of the Act as remaining unpaid, the balance amount of Rs.12,07,435/-,he held, needed to be disallowed under section 36(1)(iii) of the Act. 6. Contention of the ld.counsel for the assessee before us, briefly summarized, was that it had been explained, both during the assessment proceedings to the AO and even in the appellate proceedings before the ld.CIT(A), that the entire interest expenditure claimed by the assessee either i....
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....er his directions, his wife was paying the amount to the bank. The ld.counsel for the assessee stated that all evidences relating to disallowance of interest expenses was filed to the ld.Pr.CIT pertaining to loans taken from these banks, being computation of return of income right from Asst.Year 2007-08 on wards along with order of the Hon'ble Gujarat High Court in favour of the assessee allowing the claim of interest expenses on payment basis, and also copy of account of the assessee's wife showing payment to the bank with copy of bank statement showing credit to his account. Our attention was drawn to the submissions made before the AO during the assessment proceedings vide letter dated 5.3.2016 as under: 4. 43B I have disallowed....
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....ted the allow ability of this amount of interest. The amount of interest was disallowed in AY 2005-06. The matter was decided in my favour by the Hon' Gujarat High Court. Copy of the order is enclosed. In the subsequent years the matters were decided by the IT AT in my favour. 3.0 It has been mentioned in the notice that the amounts were paid from my wife's account. I submit that I had given a loan to my wife and was charging interest on the advance. Hence as per my direction she paid the amount to the bank. Copy of my wife's account showing the payment to bank is enclosed. I am also enclosing herewith a copy of my bank statement showing that the amount has been credited to my account. 7. The ld.counsel for the asses....
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....f the Act. As pointed out by the ld.counsel for the assessee, it had been explained during assessment proceedings, and even to the ld.Pr.CITthat the entire amount of interest expenses debited in the profit & loss account pertained to loans taken from two banks in 1999 in which dispute had arisen and accordingly the assessee was, though claiming interest expenses pertaining to these amounts in his profit & loss account, had been disallowing the same in the computation of income since 2007-08 onwards. That subsequently on resolution of all the disputes the assessee had started making payment, both principal and interest components of loan, and on payment of interest was claiming deduction under section 43B of the Act of the interest earlie....
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....wable, has pointed out no other anomaly in the explanation of the assessee nor has he pointed out why despite all the facts, as narrated and substantiated by the assessee, the claim was still disallowable under section 43B of the Act. The fact that payment made by his wife was on account of repayment of loan given by him to his wife was duly demonstrated with evidence to the Ld.PCIT. Even otherwise how the fact of payment of interest by any other person other than the assessee affects claim of expenses on payment basis as per section 43B of the Act has not been brought out by the Ld.PCIT. Therefore, we agree with the ld.counsel for the assessee that there is no error in the order of the AO allowing the assessee's claim of interest under sec....