2018 (7) TMI 2208 - AT - Income Tax

Rectification of mistake - CIT(A) as wrongly interpreted the provisions of section 57(iii) of the Act thus making the Order passed bad in law - whether CIT(A) failed to appreciate the nature of interest payment made as also the consequent receipt of interest while upholding the disallowance, which act of the Ld. CIT(A) is wrong both on facts and in law - HELD THAT - As on account of incorrect submission on fact by the assessee despite the fact that the Buyer Agreement was available before the A.O. the mistake has occurred - the specific clauses have been extracted in the written submissions before the CIT(A)., however the relevant facts appear to have been ignored while passing the order. In these peculiar facts and circumstances we deem it appropriate to set aside the impugned order accepting the oral prayer of the Sr. DR and restore the issue back to the file of the A.O. The impugned order is set aside back to the AO with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Said order was pronounced in the Open Court at the time of hearing itself. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues Involved:
- Interpretation of provisions of section 57(iii) of the Act
- Disallowance of interest claimed under section 57(iii)
- Misunderstanding of facts regarding interest payment and receipt

Analysis:
1. Interpretation of provisions of section 57(iii) of the Act:
The appellant challenged the order of the CIT(A) regarding the interpretation of section 57(iii) of the Act. The appellant argued that the CIT(A) wrongly interpreted the provision, leading to an incorrect decision. The appellant contended that the interest received from ERA Landmark was set off against the interest paid to ICICI Home finance Co. The appellant provided details of the Buyer's Agreement to support their claim that the interest payment was not related to delayed construction but was part of the agreement for earning income. The CIT(A) was criticized for misunderstanding the nature of the interest payment and receipt.

2. Disallowance of interest claimed under section 57(iii):
The appellant further contested the disallowance of interest amounting to ?13,20,445 claimed under section 57(iii). The appellant argued that the disallowance by the CIT(A) was contrary to the facts of the case and against the provisions of law. The appellant highlighted specific clauses in the Buyer's Agreement to demonstrate that the interest payment was a legitimate part of the agreement and not related to delayed construction. The appellant emphasized that the interest received was for earning income from the investment made.

3. Misunderstanding of facts regarding interest payment and receipt:
The appellant clarified the facts surrounding the interest payment and receipt, pointing out that the interest received was part of the agreement with ERA Landmark and not due to delayed construction. The appellant highlighted the specific clauses in the Buyer's Agreement to support their argument. The Senior DR acknowledged the confusion on facts and requested the issue to be remanded to the Assessing Officer for fresh consideration. The Tribunal set aside the CIT(A) order and directed the Assessing Officer to pass a speaking order after considering the correct facts and giving the appellant a reasonable opportunity to be heard. The appeal was allowed for statistical purposes.

This detailed analysis of the judgment showcases the issues involved, the arguments presented by the appellant, the responses from the authorities, and the final decision of the Tribunal, providing a comprehensive overview of the legal proceedings and outcome.