TaxTMI 
TaxTMI 
2023 (5) TMI 275
X X X X Extracts X X X X
X X X X Extracts X X X X
....al, the Ld. DR brought our attention to the affidavit filed for condonation of delay, dated 18/8/2021 wherein the Deputy Commissioner of Income Tax (International Taxation), Visakhapatnam (I/c) has explained the unavoidable circumstances that prevented the Revenue to file the appeal with a delay of 80 days. For the sake of reference, the reasons explained by the Revenue for the delay are extracted herein below: "....... ........ ........ (i) Sri Varun Ogili for the AY 2017-18 this office could not file the appeal before the Hon'ble ITAT within the due date as a result of the Covid-19 pandemic situation. The Commissioner of Income Tax (IT & TP), Hyderabad ie., Aayakar Bhavan Building was being operated as per DoPT & Home Ministry Guidelines and as per the guidelines in Para 6 of the Ministry of Health Family Welfare on preventive measures dated 18/5/2020. This had adverse effect in obtaining copies and arranging logistics for filing of the appeal before the Hon'ble ITAT within stipulated time of 60 days ie by 4/6/2021. (ii) Further, it is also submitted that the Supreme Court has extended various limitation timelines vide order in Miscell....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... U/s. 24(b) of the Act Rs. 19,05,640 6. Suppression of Bank Interest Rs. 69,191 Total Rs. 1,94,68,908 Aggrieved by the above additions, the assessee filed an appeal before the Ld. CIT(A). 5. Before the Ld. CIT(A), the assessee submitted evidences with respect to the land holdings on which agricultural income was derived by the assessee. Further, the Ld. AR also argued before the Ld. CIT(A) that the interest on the outstanding balances has been calculated based on the amount of loan outstanding at the end of the year for a period of full year and not from the date of granting of loan to the various borrowers. Further, the Ld. AR also argued before the Ld. CIT(A) that the assessee has a total withdrawal of Rs. 1,64,64,000/- and cash deposits of Rs. 1,35,77,000/-. The Ld. AR also further submitted before the Ld. CIT(A) that the assessee has disclosed Rs. 1,85,50,356/- as cash deposits which is already disclosed in the AY 2016-17. Further, during the submissions before the Ld. CIT(A), the Ld. AR stated that interest was wrongly claimed U/s. 24(b) of the Act but has to be allowed from the business income already disclosed by the assessee while filing th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bove grounds of appeal either before or at the time of hearing of the appeal, if considerate necessary." 7. Further, the Revenue filed the following additional grounds of appeal: "1. The CIT(A) has erred in deleting the agricultural income of Rs. 2,00,000 in the absence of any evidence furnished by the assessee in support of carrying on agricultural activities and generation of agricultural income. 2. The CIT(A) is not justified in allowing the interest expenses to an extent of Rs. 10,81,524/- for which the assessee never filed any statement of certificate from the bank before the Assessing Officer. Further, there is no finding of fact recorded to this extent in the appellate order of the Ld. CIT(A). Further, the Ld. CIT(A) has erred in allowing interest on mortgage loan of Rs. 8,24,116/-. The assessee could not establish that the interest expenditure incurred against the income of Rs. 10,43,193/-. 3. The Ld. CIT(A) has erred in deleting the addition of Rs. 26,90,643/-. During the assessment proceedings in response to the show cause notice issued by the AO, the assessee vide para no.7 of his letter dated 23/12/2019 voluntarily admitted Rs. 10,42,193/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tated that the interest was wrongly claimed U/s. 24(b) of the Act. The Ld. AR further submitted that the interest has to be considered as a business expenditure as the amount borrowed has been utilized for granting loans to various parties and the interest income arising out of the loans granted has been admitted while filing the return of income. The Ld. AR further submitted that these facts have been submitted before the Ld. AO and the Ld. AO has failed to consider the same. He therefore pleaded that the order of the Ld. CIT(A) be upheld. 11. We have heard both the parties and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is the case of the Ld. AO that the assessee has wrongly claimed interest to the extent of Rs. 21,72,118/- U/s. 24(b) of the Act. However, the Ld. AO observed that during the assessment proceedings the assessee has not produced any certificate from the bank in support of his claim. The Ld. AO based on the information gathered found that the assessee has paid only Rs. 2,66,478/- towards interest on housing loan which is eligible for deduction u/s 24(b), and thereby disallowed Rs. 19,05,640/- which is not eligi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Ld. CIT(A) has therefore found that the Ld. AO has estimated a uniform rate of interest and has adopted uniform time period with respect to every loan lent by the assessee. However we find that the Ld AO has not adopted uniform time period but has adopted interest @ 18%. We find that the Ld CIT(A) has computed the interest on the loans advanced by the assessee @ 12%. However the Ld CIT(A) has failed to consider the voluntary admission of interest for Rs 10,42,193/-. We also find from the order of the Ld AO in Page No 7 the assessee has admitted interest voluntarily for Rs.10,42,193/- being the difference in the computation by the assessee on the interest receipts aggregating to Rs 15,13,533/-after netting interest admitted in the return of income for Rs 4,71,340/-. The Ld AO has not substantiated his assuming of interest at 18% as the prevailing rate. Neither the Ld AO conducted any enquiry with the borrowers. We find that Ld CIT(A) has adopted interest @12% as claimed by the assessees, but has failed to consider the assessee's computation and his voluntary admission of Rs 10,42,193/-.We therefore do not concur with the revised computation and direct the Ld. AO to adopt the amoun....