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TMI Blog2016 (7) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed a second innings by addressing one element of entire claim of the assessee which was scrutinized during the assessment. As noted, the petitioner had putforth a claim of interest expenditure of ₹ 7.28 crores for the entire borrowed sum of ₹ 41.43 crores. Interest expenditure of ₹ 2.68 crores against newly issued OFCD of ₹ 14.89 crores was part of this larger claim. When the entire claim was examined by the Assessing Officer by calling upon the assessee to produce all supporting documents and materials, it would now not be possible for Assessing Officer to disallow this claim and contend that this element of assessee's claim was not examined and would be open for reexamination during the fresh assessment. - Decided in favour of assessee - SPECIAL CIVIL APPLICATION NO. 2798 of 2016 - - - Dated:- 5-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR TUSHAR P HEMANI, ADVOCATE, MS VAIBHAVI K PARIKH, ADVOCATE FOR THE RESPONDENT : MR PRANAV G DESAI, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 23.03.2015 issued by the respondent, see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not used for purchase of property or repayment of earlier loan. The interest to the extent of ₹ 2,68,14,074/- - 18% of ₹ 14,89,67,078/- ) was paid on New Optionally Fully Convertible Debenture of ₹ 14,89,67,078/- . Out of this, the addition on building amounting to ₹ 34,53,367/- as shown in the statement of fixed assets can be treated as loan utilized for addition in the existing property and interest of ₹ 6,21,606/- - 18% on ₹ 34,53,367/- ) was required to be allowed. Therefore, the interest paid to the extent of ₹ 2,61,92,468/- is required to be disallowed. Since the assessee has not disallowed the said interest of ₹ 2,61,92,468/- there is escapement of income to the extent of ₹ 6,21,606/- 18% on ₹ 34,53,367/- was required to be allowed. Therefore, the interest paid to the extent of ₹ 2,61,92,468/- is required to be disallowed. Since the assessee has not disallowed the said interest of ₹ 2,61,92,468/- there is escapement of income tot he extent of ₹ 2,61,92,468/- within the meaning of sec. 147 of the IT Act. 3. The petitioner raised detailed objections to the reopening of the assessment und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for our purpose. 1. A brief note on the nature of activities under taken during the year relevant to A.Y 2010-11. Also furnish the address of the office, branches and other premises if any and the nature of activities conducted from these premises. Please given details of sister concerns, if any, with which you are dealing. (In the following format) Complete Address Whether office, Factory, Godown, Branch office Others Whether owned or rented Nature of business activities carried out Telephone /Fax No. Name designation of the person incharge 4. As regards unsecured loans (Rs.414359187/- ), please given party wise breakup in descending order. Also give address, PAN and confirmation and ledger copy. Please given interest paid on the loans and tax deducted thereon. 10. Furnish complete details in respect of following incomes (i) Other income Rs.392786/- ii) Rental income Rs.4316791 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice these persons are doing for the company. Produce evidence of qualifications these persons are having with respect to job assigned to them with due justification as to why this claim should not be considered excessive.? 7. Under letter dated 24.12.2012, the petitioner replied to such queries as under: Sr. No. Particulars Remarks 1. A brief note on the nature of activities under taken during the year relevant to A.Y 2010-11. Also furnish the address of the office, branches and other premises if any and the nature of activities conducted from these premises. Please give details of sister concerns, if any, with which you are dealing. The Company has acquired a building (mall) at Rajkot, Gujarat on single ownership basis for the purpose of generating rental income from immovable properties. For address of office, branches and other premises, please refer AnnexureI Page Numbers from 01 to 01 4 As regards unsecured loans (Rs.414359187/- please give party wise breakup in Descending order. Also give address, PAN and confirmation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (13) Interest on TDS Rs.1422617/- (14) House Keeping Expenses Rs.1487974/- (15) Legal Professional Charges Rs.2319851/- (16) Security Service Charges Rs.1377899/- 20 Please furnish details of payment to persons specified in Section 40A(2)(b). Specify nature of work Service these persons are doing for the company. Produce evidence of qualifications these persons are having with respect to job assigned to them with due justification as to why this claim should not be considered excessive? NIL Interest Expense of ₹ 72800166/- has been paid to IL FS Milestone Fund I. 8. After such detailed inquiries, the Assessing Officer passed the order of assessment in which, he observed as under: 2. The case was selected for Scrutiny, Statutory notice u/s. 143(2) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s out of the income from house property. Interest paid on loan taken on purchase of property is allowable expenditure, however, in the present case, the assessee had shown addition only to the extent of ₹ 34.53 lacs towards building, but had obtained loan of ₹ 14.89 crores by issuing new debentures. Thus, according to the Assessing Officer, such sum was not used for purchase of properties or repayment of earlier loan and that therefore, out of the total amount of ₹ 14.89 crores raised through OFCD interest only relatable to ₹ 34.53 lacs would be allowable deduction and the rest of the claim would have to be rejected. 10. As noted, the petitioner had putforth a claim of interest expenditure of ₹ 7.28 crores for the entire borrowed sum of ₹ 41.43 crores. Interest expenditure of ₹ 2.68 crores against newly issued OFCD of ₹ 14.89 crores was part of this larger claim. When the entire claim was examined by the Assessing Officer by calling upon the assessee to produce all supporting documents and materials, it would now not be possible for Assessing Officer to disallow this claim and contend that this element of assessee's claim was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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