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TMI Blog2013 (12) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's claim and to allow/disallow the set off of losses in terms of relevant provisions of the Act - His order, with regard to treatment to be given to brought forward losses does not suffer from any infirmity – The issue was restored for fresh decision. Interest paid - Borrowed fund for acquiring rights – Held that:- FAA had accepted the alternate submission of the assessee with regard to deduction of interest expenses - As the main issue is being restored to the file of the FAA - All the issues raised by the AO are restored to the file of the FAA for deciding them afresh depending upon the ultimate decision of the main issue – Partly allowed in favour of assessee. - ITA No. 8608/Mum/2010, ITA No.196/Mum/2011, ITA No.5864/Mum/2011 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) failed to appreciate that funds borrowed for acquiring rights in the property which was a capital asset in the hands of the assessee as taking over of such liabilities is not assessee's business. The interest attributable to such borrowed funds can only be capitalized till the date of disposal of the right or property and cannot be allowed as revenue expenditure. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) failed to appreciate that funds being not borrowed for earning of interest income, the interest attributable to the borrowed funds cannot be allowed as deduction against interest income, following the decision of the Hon'ble Apex Court in the case of CIT vs. Dr. V. P. Gopinathan (248 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability, that it borrowed money from three Directors of the company @ 12% per annum, that it paid the amount as per the rights of assignment entered into with the Bank vide a deed of assignment and transfer dated 26.02.1999. AO was of the opinion that Directors had mortgaged the property to the Bank as security for the repayment of loans taken by other two entities in which the Directors or the Directors along with the other members of the family were involved, that property mortgaged was put up for auction because two entities who had taken the loan had defaulted in repayment, that by deed of assignment and transfer assessee did not acquire the right in property, that it had acquired the right to recover the debt outstanding against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me accrued to the assessee, was allowable u/s. 57 of the Act. He directed the AO to work out such interest expenditure and allowed the same to the extent from interest income. 3.Before us, Authorised Representative (AR) submitted that "F" bench of Mumbai Tribunal, vide its order dated 30.06.2011(ITA Nos. 2989-2993/Mum/2010 AY-2001-02 to 2005-06), had dealt the issue at length and had restored back the matter to the file of the AO for deciding the issue afresh, that AO had made the same addition while passing the order in pursuance of the order of the Tribunal, that assessee had challenged the fresh order of the AO before the FAA, that appeal filed by the assessee still pending with the FAA. Departmental Representative (DR) supported the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out by the assessee in the assessment order passed by the AO go to the root of the matter and the same have a direct bearing on the main issue involved in these appeals relating to addition made on account of interest income stated to be accrued to the assessee.The learned representatives of both the sides have agreed that this issue needs to be sent back to the AO for deciding the same afresh after giving the assessee an opportunity of being heard on the issue of various factual mistakes claimed to be committed while framing the assessment which are crucial to decide the said issue. Accordingly the impugned orders of the learned CIT(Appeals)on this issue are set aside and the matter is restored to the file of the AO with a direction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses against the addition of Rs. 48.72 lacs is concerned, FAA had directed the AO to verify the assessee's claim and to allow/disallow the set off of losses in terms of relevant provisions of the Act. In our opinion his order, with regard to treatment to be given to brought forward losses does not suffer from any infirmity. Therefore, ground no.2(b)filed by the assessee is decided against it. We have already set-aside the issue raised by the assessee in ground no.1 to the file of the FAA, therefore, in the interest of justice ground no.2(a) is also restored to the file of the FAA for fresh adjudication. As directed earlier FAA would afford a reasonable opportunity of hearing to the assessee before deciding the issue. Ground no.2 is allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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