9911796707
TMI Blog2011 (8) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... , Smt. Sutapa Roy Choudhury. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against order dated 22nd August, 2002, passed by the Income-tax Appellate Tribunal, "B" Bench, Kolkata, in Income-tax Appeal No.1036 (Cal) of 1997 for the Assessment Year 1993-94 and thereby partly allowing the appeal filed by the Revenue. Being dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of this appeal may be summed up thus: a) The appellant is a registered Partnership Firm carrying on business of giving loans and advances and the present appeal arises out of assessment for the Assessment Year 1993-94, of which the Prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.73,24,200/- worked out at Rs.10,98,630/- and the same amount could be treated as outside the scope of disallowance on the ground that the interest from advances to the extent of Rs.73,24,200/- could be treated as coming out of the assessee's own generated funds in respect of which it was not required to incur any liability on account of interest payable on the borrowed money. It was further held that in working out the disallowance out of the amount of interest debited to the profit and loss account, the assessee should be allowed the benefit accruing from liberty to advance loans aggregating to Rs.73,24,200/- free from interest without in any way adversely affecting its claim for deduction of interest liability. Thus, the CIT (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest paid on borrowed funds should be disallowed if the same was not utilized for business purpose f) Being dissatisfied, the assessee has come up with the present appeal. At the time of admission of this appeal, a Division Bench of this Court formulated the following substantial questions of law for decision: "(i) Whether on proper interpretation of Section 36(1)(iii) of Income Tax Act, 1961 the direction of the Tribunal that if borrowed funds have been diverted to interest free advance then interest payable on borrowed funds is disallowable is sustainable in law. "(ii) Whether the Tribunal acted legally is directing to disallow interest proportionately or otherwise by calculation of the rate of interest on which the rate of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such a situation, there is no necessity of passing an order of fresh assessment on all points. In the case of State of M. P. vs. Nerbudda Valley Refrigerated Products Company Pvt. Ltd. and Ors (supra), relied upon by Mr. Dutt, the Supreme Court was dealing with a case where the High Court in exercise of writ-jurisdiction interfered with an order of an original authority having jurisdiction notwithstanding the provisions of appeal before the Collector against such order. In such a situation the Supreme Court held that even if the order of the first authority, in that case, Nazul Officer, required interference, it was for the appellate authority to look into it and take a decision one way or the other and it was not an extraordinary case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder and remanding the matter specifying the field of investigation. The above decision does not apply to the facts of the present case. In the case of CIT vs. H. P. State Forest Corporation Ltd (supra), a Division Bench of Himachal Pradesh High Court was considering a case where the accounts of the assessee, a State Government Corporation, not having been audited by the office of the Comptroller and Auditor General, the Assessing Officer treated the assessee's return as a non est and passed order of assessment under Section 144 of the Act. The CIT (A) affirmed such order but on a further appeal, the Tribunal set aside the assessment and directed assessment with audited accounts submitted by the assessee with further direction the income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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