TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 638
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 143(3) of the Income-tax Act, 1961 (for short 'the Act') determining total income at Rs. 75,86,98,436/-. Subsequently, the case was reopened u/s 147 of the Act by issue of notice u/s 148 of the Act on 31.03.2014 along with copy of reasons. The notices u/s 143(2) and 142(1) of the Act are issued and served on the assessee. In response, ld. AR of the assessee attended and submitted the information as called for. 3. In response, assessee submitted vide letter stating that final assessment order after appeal effect may be treated as return filed in response to notice u/s 147/148 of the Act. During assessment proceedings, Assessing Officer observed from the audited financial statements for the year ended 31.03.2007 that the assessee has taken secured loans from banks and balance outstanding and interest payment of Rs. 4,38,00,487/- claimed in the Profit & Loss account. He observed that assessee has made investment during the year amounting to Rs. 450,25,06,418/- on which no income has been derived or earned by the assessee. Based on the above information, the Assessing Officer analysed the investments made by the assessee, made interest free loans and advances made to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion Tax (BCIT) 13,700 10. Mortgage Charges 11,200 11. Premature Release Penalty on FD-110500131 1,16,194 12. Processing Fees on renewal of CC Limit 7,92,638 13. Interest on Service Tax 5,463 14. Interest on FBT 19,119 15. Interest on Income Tax 4,93,500 16. Foreign Exchange Fluctuations 1,968 Total 438,00,488 9.4 The major amount of Rs. 3,36,72,000/- has been claimed by the appellant (Sr No.1) to have been paid as advisory fees to ICICI Securities, which was lead banker for a consortium of banks, which have advanced loans to the appellant. The loans of the appellant have increased from 36.36 crores as on 31.03.2006 to Rs. 229.07 crores as on 31.03.2007. The appellant has deducted TDS on this payment made to ICICI Securities. In the remand report proceedings, the AO has reported that the appellant has paid amount of Rs. 3,36,72,000/- out of the total bill of Rs. 6,64,74,760/- and the period of services provided by the bank is not mentioned. The AO further submitted that nature of services provided by the bank could not be ascertained and it was also not clear whether the services were provided....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion in the absence of any period mentioned will be that it belongs to the period falling in the year under consideration. Further, the appellant has raised loans from consortium of banks during the year itself, therefore the probability that the bill belongs to the services rendered for raising these loans during the year is very high. The accounts of the appellant are duly audited and the AO has not made any enquiries with the ICICI Securities regarding the period of services, to bring any adverse evidence on record, but has raised this issue on the basis of suspicion. In the remand report proceedings, the AO could have ascertained the facts from M/s. ICICI Securities if there was any doubt on any such issue in the mind of the AO. The appellant has made part payment of the invoice raised to it accepting that much amount for the year and TDS has been duly deducted on this amount. In these circumstances, it is held that the appellant has booked the part expenses during the year on the basis of payment made to ICICI Securities and these expenses do belong to the year under consideration as loans have been raised during the year. Accordingly, the appellant is allowed the expenses of R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Buildcon Pvt. Ltd and M/s. KST Buildwell Pvt. Ltd are also land owing companies and they were acquired by the appellant along with the land owned by them, and ultimately made into a subsidiary of the appellant company. Regarding the Ludhiana Project, the appellant stated that this was one of the real estate projects of the appellant company. The appellant stated that interest on car loan was clearly for the car, and the other expenses towards bank charges and bank guarantee fees were also unjustifiably disallowed and did not represent any payment for non-business purposes. 2.5 The appellant stated that it had clearly established a nexus between the interest claimed and the purpose for which the interest bearing funds had been advanced this year, and had shown that the funds were advanced for business purposes only. The appellant has referred to several judicial decisions in support of its claim including the decision of the Hon'ble Supreme Court is S. A. Builders Ltd vs CIT (238 ITR 1) and CIT vs Reliance Utilities & Power Ltd (2009) 313 ITR 340 (Bom). It is clear from the above that the appellant has given a detailed and valid explanation justifying the allowability o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nds for non-business purposes, coupled with the decision of my predecessor for AY 2006-07 on the same issue (on same facts), It is held that the appellant had utilized the borrowed funds for the purpose of the business expediency of the appellant. In these facts of the case, the amount of Interest paid by the appellant on borrowed capital is fully allowable. Accordingly, the amount of Rs 74,54,9 13/- paid by the appellant on CC limit is allowed as business expenditure to the appellant. 9.6 The appellant had provided detailed explanation on the remaining amounts (the Sr. nos 1 & 3 have already been discussed in the above para) paid by the appellant for the purpose of business of the appellant except at Sr. Nos 9,13,14, & 15 in the above table-1. The appellant had explained that amounts paid to Lucky motors, Sonakshi marketing, Ms Ragini Gulati & Urvashi Gulati were interest paid to these trade creditors. The remaining amounts like bank charges, interest on car loan, processing fees for renewal of CC limit etc. were in the ordinary course of business for the purposes of the business of the appellant. The AO had not made any remarks in the remand report regarding allowability....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olding the reopening of assessment dings under section 147 r.w.s. 148 of the Income Tax Act, 1961 (lithe Act") as valid and further erred in rejecting the submissions of the assessee company against the said reopening by them to be academic in nature which is highly arbitrary, unjustified, unlawful and against principles of natural justice. 2. The Ld. CIT(A) has erred in law and facts of the case in sustaining the legality of assessment proceedings under section 147.r.w.s 148 of the Act, which was completed by the Ld. A.O without passing any speaking order, which is against the principles for disposal of objections to reopening assessment as laid down by the Hon'ble Apex Court in GKN Driveshafts (India) Ltd. vs. DCI: 259 ITR 19 (SC). 3. The ld. CIT(A) has erred in law and facts of the case in passing the order without considering the letter filed by the assessee on account of objection to 'Service of Notice' since the notice under section 148 was delivered to the appellant company on the wrong address. 4. The Ld. CIT(A) has erred in law and facts of the case in still sustaining the addition of Rs. 5,31,782/- under section 36(1)(iii) which is h....