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TMI Blog2019 (8) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for execution of the work under the joint venture. Once the said amount was not utilized by M/s KIEL otherwise than the execution of the contract work of the assessee joint venture then the interest paid on the mobilization advance is an allowable expenditure in the hand of the joint venture. It is also not disputed that KIEL is also paying tax @ 30% though the AO pointed out that the said interest was not claimed by the KIEL to maximize the claim of deduction U/s 80IA. We find that the contract work received by the KIEL are not eligible for deduction U/s 80IA and only the wind mill power generation was eligible U/s 80IA. Thus, the said reasoning of the AO is contrary to the facts while disallowing the claim of interest. Hence, in view of the above facts and circumstances of the case we hold that even on merits the claim of the interest on paid to RVNL on mobilization advance is allowable expenditure of the assessee joint venture. - ITA No. 568/JP/2018, ITA No. 569 & 570/JP/2018 - - - Dated:- 5-8-2019 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Manish Agrawal (C.A.) For the Revenue : Shri Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractor on contract activity, thus the sole basis of Id. AO of making disallowance of interest is contrary to the fact and therefore disallowance deserves to be deleted. 2.2 That , ld.CIT(A) has further erred in confirming the disallowance of ₹ 9,01,730/- by ignoring the fact that it ultimately remains a revenue neutral exercise in as much as if the same is not allowed to assessee, then the same shall be claimed by and allowable to the sub contractor M/s Kiran Infra Engg. Ltd. whose taxable income shall reduce to that extent more particularly when both the entities, i.e. the assessee and M/s Kiran Infra Engg. Ltd. are in same tax bracket of 30%. and contract activities undertaken by M/s Kiran Infra Engg. Ltd., are not eligible for exemption u/s 80IA, thus no useful purpose would be served in claiming the deduction in wrong hands. 3. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 2. The assessee has challenged the disallowance made by the AO of ₹ 9,01,730/- on account of interest on mobilization advance received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. Once the said mobilization advance received from the RVNL was utilized for execution of the work awarded then the interest on the said advance is an allowable expenditure of the assessee AOP. In support of his contention, he has relied upon the decision of Hon ble Supreme Court in case of T.S. Balaram, ITO vs. M/s Valkart Brothers 82 ITR 50 (SC) and submitted that the Hon ble Supreme Court has held that a mistake apparent on record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. A decision on a debatable point of law is not a mistake apparent from the record. Thus, the ld. AR has submitted that the issue of allowability of interest is beyond the scope of rectification of mistake apparent on record U/s 154 of the Act. Hence, the impugned order passed by the AO is beyond the jurisdiction and liable to be quashed. 3.1. On merits:- The ld. AR has submitted that as per the agreement the partner the joint venture agreement the expenditure in respect of execution of the contract work has to be incurred from the amount rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities below. 5. We have considered the rival submissions as well as the relevant material on record. The first objection of the assessee against the order passed U/s 154 of the Act by the AO is that the said order is beyond the scope of rectification of mistake apparent on record. The ld. AR has relied upon the decisions on this point and contended that the claim of interest proposed to disallow by the AO while passing the order U/s 154 is debatable issue. There is no dispute that the scope of rectification U/s 154 of the Act is very limited and circumscribed only to rectify the mistake apparent on record which does not require any long drawn process of reasoning on the issue which may have two views. Thus only the mistake apparent on record which is obvious and patent can be rectified in the proceedings U/s 154 of the Act. In the case in hand the AO has given the reasoning running into 3 pages for disallowance of the claim of interest in respect of mobilization advance received from RVNL in respect of the contract work awarded to the joint venture. We have already discussed the facts that as per the joint venture agreement the lead partner M/s KIEL took the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the record is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record. In this case it is not necessary for us to spell out the distinction between the expression error apparent on the face of the record and mistake apparent from the record . But suffice it to say that the ITO was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent. Accordingly, in the facts and circumstances of the case when the issue of allowability of the claim of interest paid to RVNL is a debatable issue on which a decision is required on the basis of the relevant facts of the case then it is not an apparent mistake on record which is obvious and patent that can be rectified without the process of long drawn reasoning. Accordingly, we hold that the order passed by the AO U/s 154 of the Act dated 29.12.2015 is beyond the scope and jurisdiction of the AO and consequently the same is liable to be quashed. 5.1 On merits:- We find that the AO has not disputed that the said interest of ₹ 9,01,730/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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