2018 (9) TMI 1821 - AT - Income Tax

Admission of additional evidence - HELD THAT - additional evidence filed by the assessee in the form of a letter from Government of India, Ministry of Health Family Welfare dated 14/06/2018 is very vital for deciding the disputed issue. As relying on NATIONAL THERMAL POWER COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX 1996 (12) TMI 7 - SUPREME COURT we are inclined to admit the additional evidence. Accordingly, we remit this issue to the file of the CIT(A) to decide it afresh after considering the relevance of the letter cited. Ground of appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues:
1. Setting off interest income against construction expenses.
2. Applicability of a specific court ruling.
3. Setting off business loss against additions made.
4. Admissibility of additional evidence.

Issue 1: Setting off interest income against construction expenses
The appellant contested the Assessing Officer's decision not to set off interest income received during the construction period against construction expenses, treating it as income from other sources. The appellant argued that income from funds linked to setting up a plant should be capitalized. The CIT(A) upheld the decision, stating that income from surplus funds deposited with banks is not incidental to the project and should be taxed separately.

Issue 2: Applicability of a specific court ruling
The appellant contended that the court ruling in the case of Turticorin Akali Chemicals & Fertilizers Ltd. was not applicable to their case. However, the CIT(A) did not find merit in this argument and decided against the appellant.

Issue 3: Setting off business loss against additions made
The appellant also challenged the decision of not setting off a business loss against additions made by the Assessing Officer. The CIT(A) confirmed the decision, leading to further appeal by the appellant.

Issue 4: Admissibility of additional evidence
During the appeal, the appellant sought to introduce additional evidence in the form of a letter from the Government of India. The Tribunal, citing a Supreme Court judgment, allowed the additional evidence, remitting the issue back to the CIT(A) for reconsideration based on the new evidence.

The judgment highlights the importance of considering all aspects and relevant evidence in tax assessments. It emphasizes the need for proper application of legal principles and court rulings in determining tax liabilities. The decision to allow additional evidence underscores the significance of ensuring a fair and thorough review of all pertinent information in tax disputes.