TaxTMI 
TaxTMI 
2025 (7) TMI 293
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....through its grounds of appeal are regarding the decision of the ld CIT(A) in deleting the addition of Rs. 3,83,08,176/- made by the ld AO on account inadmissible interest u/s 36(1)(iii) of the Act. Explaining the brief factual matrix of the case the ld DR submitted that the ld AO had noted that the Assessee had debited expenditure of Rs. 2,02,10,590/- in its profit and loss account as an interest expenses. The ld AO noted that Section 36(1)(iii) of the Act provides for allowance of interest on borrowed capital provided the same is utilized for the purposes of business or profession. The ld AO observed that in the present case interest bearing funds were utilized by the Assessee for investment in short term deposits (SDR) which did not had a....
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....tion made to fixed assets. d. Higher turnover reported in service tax return compared to ITR and Assessee has deposited large amount of cash in saving bank account. e. Mismatch of custom duty paid as shown in the ITR with the Duty paid as per export import data (CBEC Tab of ITS) 4. It was argued by the ld counsel for the Assessee that in neither of the five reasons there was any mandate to examine allowability of interest u/s 36(1)(iii) of the Act. Thus, the addition per se was stated to be inadmissible. On the issue of merits of the addition also the ld counsel submitted that the order passed by ld CIT(A) is based upon correct understanding of the facts of the case and that no further interference is required to be made therein. 5. W....
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....e case of Best Plastics Pvt. Ltd reported in 169 taxmnn 4 wherein it has held that the instructions of CBDT are binding upon the assessing authorities. Thus, we are of the considered view that Instruction No. 5 of 2016 dated 14.07.2016 of CBDT mandating adherence to only limited scrutiny condition by the ld AOs of the department is mandatory and binding. The impugned instruction postulates that an AO may travel beyond the reasons given in the limited scrutiny parameters, provided he obtains necessary approval from his Pr. Commissioner and proceeds to convert the case into a complete scrutiny case. We have also noted that there exists a catena of cases stipulating that an AO is to restrict his enquiry and consequent addition only to the issu....
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.... the CBDT has recorded that this gave rise to a very strong suspicion of mala fide intentions and the Officer concerned has been placed under suspension. Therefore, it was reiterated that the Assessing Officer should abide by the Instructions of CBDT while completing limited scrutiny assessment and should be scrupulous about maintenance of note sheets in assessment folders. 9. Thus, considering these aspects, we are of the view that the learned Tribunal rightly allowed the assessee's appeal on the said issue. This Court had an occasion to consider a somewhat similar issue in the case of Pr. CIT v. Sukhdham Infrastructures LLP, in [ITAT No. 164 of 2023, dated 14-8- 2023]. In the said case an identical contention as raised before us was....