2013 (3) TMI 783 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of interest u/s 36(1)(iii).
2. Non-allowance of claim of expenditure in revised return of income.

Summary:

Issue 1: Disallowance of interest u/s 36(1)(iii)

The Revenue appealed against the deletion of an addition on account of disallowance of interest u/s 36(1)(iii) amounting to Rs. 49,37,388/-. The assessing officer observed that the assessee made investments in overseas companies, which were not for business purposes and did not generate income. Consequently, interest expenses related to these investments were disallowed. The Ld. CIT(A) deleted the addition, noting that similar disallowances in earlier years were overturned by ITAT Ahmedabad and confirmed by the jurisdictional High Court. The Tribunal upheld the Ld. CIT(A)'s order, finding no infirmity in it. Thus, the Revenue's appeal was dismissed.

Issue 2: Non-allowance of claim of expenditure in revised return of income

The assessee contested the Ld. CIT(A)'s confirmation of the A.O.'s action in not allowing an expenditure claim of Rs. 90,97,554/- in the revised return. The assessee argued that the revised return was filed to account for expenses that were mistakenly omitted in the original return. The Ld. CIT(A) rejected this submission, stating that the revised return was filed after the time limit and was therefore non-est. The Ld. CIT(A) also cited the Supreme Court's decision in Goetze India Ltd. vs. CIT, which restricts the assessing officer from entertaining claims outside a revised return. However, the Tribunal found merit in the assessee's argument that appellate authorities have the power to adjudicate such claims, referencing the jurisdictional High Court's decision in CIT vs. Symphony Comfort Systems Ltd. Consequently, the Tribunal restored the matter to the Ld. CIT(A) for a decision on the merits. The assessee's C.O. was allowed for statistical purposes.

Conclusion:

The Tribunal dismissed the Revenue's appeal regarding the disallowance of interest and allowed the assessee's C.O. for statistical purposes, remanding the issue of non-allowance of expenditure in the revised return back to the Ld. CIT(A) for adjudication on merits.