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TMI Blog2022 (9) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... siness and the interest paid thereon would constitute an allowable deduction. There is no diversion of funds for non-business purpose and no finding or allegation from assessing officer to that effect. Assessee utilized borrowed funds for its own business, therefore, assessee is entitled to claim deduction on account of interest expenditure and we find no infirmity in the order of CIT(A) in deleting the disallowance made by the AO on account of interest expenditure.The order of CIT(A) is justified. Ground No. 1 raised by the appellant-revenue is dismissed. Addition made on account of processing fee paid to banking institutions - CIT(A) deleted the said addition by recording its reasons taking into consideration the relief granted to the assessee on account of interest payment - HELD THAT:- In view of our decision on ground No. 1, where we confirmed the order of CIT-A in holding the expenditure on account of interest payment on loans availed from bank for business purpose is allowable deduction, therefore, we find no infirmity in the order of CIT(A) in holding the assessee is entitled to claim deduction on account of processing fees. Thus, we agree with the reasons recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee itself agreed for the disallowance on its own before the AO and has no right to file appeal before the CIT(A). The ld. DR drew our attention to para 4.a of the assessment order and argued that the authorized representative on behalf of the assessee agreed for the disallowance of proportionate interest on the loan utilized for purchase of shares and accordingly made signature on the order sheet. He vehemently argued that, in view of the same the CIT(A) should not have considered the grounds challenging the disallowance made by the AO. The CIT(A) by accepting the submissions of assessee deleted the addition without going into the merits of facts and circumstances of the case. Secondly, he submits that the assessee opted for Vivad Se Vishwas Scheme for A.Ys. 2012-13 and 2013-14 and by following principle of consistency the assessee should have considered in opting Vivad Se Vishwas Scheme for the year under consideration. The ld. DR, Sri M.G. Jasnani, vehemently argued that for A.Ys. 2012-13 and 2013- 14, the CIT(A) passed the same order on the same lines that of the year under consideration, but, having getting relief from the CIT(A) the assessee opted for Vivad Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the decision of Hon ble Supreme Court in the case of Bharat Heavy Electricals Ltd. (supra) wherein the Hon ble Supreme Court observed that concessions on mixed questions of fact and law cannot decide cases as the evidence as a whole has to be weighed and inferences drawn therefrom. We note, further, the Hon ble Supreme Court referred to a decision in the case of Swami Krishnanand Govindananad Vs. Managing Director, Oswal Hosiery (Regd.) reported in (2002) 3 SCC 39 which held, even a concession on facts disputed by a respondent in its written statement cannot bind the respondent, on an occasion, that the statement made by the counsel cannot be accepted as an admission so as to bind the respondent. Further, the Hon ble Supreme Court referred to a decision in the case of C.M. Arumugam Vs. S. Rajgopal reported in (1976) 1 SCC 863 which held that a question involving mixed question of law and fact and a concession made by the party on such a question at the stage of argument before the High Court, cannot preclude him from reagitating it in the appeal before the Supreme Court. The relevant portion of the findings of the Hon ble Supreme Court reads as under: What is clear from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned counsel of a party across the Bar be treated as admission of the party? Having regard to the requirements of Section 18 of the Evidence Act, on the facts of this case, in our view, the aforementioned statement of the counsel for the respondent cannot be accepted as an admission so as to bind the respondent. Excluding that statement from consideration, there was thus no material before the Additional Rent Controller to record his satisfaction within the meaning of clause (d) of Section 22 of the Act. It follows that the order of eviction was without jurisdiction. Equally, where a question is a mixed question of fact and law, a concession made by a lawyer or his authorised representative at the stage of arguments cannot preclude the party for whom such person appears from reagitating the point in appeal. In C.M. Arumugam v. S. Rajgopal [(1976) 1 SCC 863], this Court held: 8. . That question is a mixed question of law and fact and we do not think that a concession made by the first respondent on such a question at the stage of argument before the High Court, can preclude him from reagitating it in the appeal before this Court, when it formed the subject- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le after such determination, in such form as may be prescribed. (2) The declarant shall pay the amount determined under sub-section (1) within fifteen days of the date of receipt of the certificate and intimate the details of such payment to the designated authority in the prescribed form and thereupon the designated authority shall pass an order stating that the declarant has paid the amount. (3) Every order passed under sub-section (1), determining the amount payable under this Act, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the Income-tax Act or under any other law for the time being in force or under any agreement, whether for protection of investment or otherwise, entered into by India with any other country or territory outside India. Explanation.-For the removal of doubts, it is hereby clarified that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a party in appeal or writ petition or special leave petition to contend that the declarant or the income-tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shwas in an assessment year. Whether it is open for Revenue to take a stand that the additions have been accepted by the appellant and hence he cannot dispute it in future assessment years? Answer Please refer answer to question no 52. It has been clarified in Explanation to clause 5 that making a declaration under Vivad se Vishwas shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a part in appeal or writ or in SLP to contend that the declarant or the income tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute. 13. We note that answers to Q. Nos. 52 and 55 r.w. Explanation to clause 5 of the Vivad Se Vishwas created embargo on the appellantrevenue to challenge that the assessee has acquiesced the disputed issue by settling the same availing option under the Vivad Se Vishwas Act and it should be applicable to the same issue pending. Therefore, the arguments of Ld. DR are rejected. 14. Further, to the vehement contention of ld. DR that no independent finding given by the CIT(A) with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled as SHREE CLINIC around 30 bed facility in Pune. As the business of the owner doctors (Dr.ARP Dr. AAP ) was growing, they felt need for new, ultra-modern bigger hospital to cater to the increasing demand. They decided to construct their own new bigger 100 bedded facility and started searching for new place sometime in 2003. Later on they decided upon a half completed site (basement, plinth and minor superstructure) on plot of land owned by TATA Finance Limited. The property was purchased by the assessee for Rs.4.59 crores by availing Term Loan from Corporation Bank Ltd for the entire hospital. During F.Y. 2006-07 Corporation Bank granted and disbursed a loan of Rs.12 Crores. Due to price escalations, additional funds were required to complete the hospital building. Corporation Bank sanctioned and disbursed additional term loan of Rs.4.40 crores during F.Y.2007-08. The building was completed with bank finance. The fund requirement for fully furnishing the hospital building with machinery, furniture etc. was around Rs. 20-25 crores to make the hospital fully operational and functional thereafter. Corporation Bank declined to sanction any additional loan for completing the proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take any professional fees. Due to the said condition of minimum profit, they both felt there was threat of reduction in lease rentals being condition in lease agreement and the term loan liability of assessee borrowed against hospital building had gone up substantially. 18. At the same time, we note that the capital venture company with 49% shareholding were also not happy as the collection was not as what they had expected earlier. During the said period, assessee also felt the monthly servicing of the term loan from Corporation bank was becoming cumbersome and heavy to manage from lease rental received from ONP as per lease agreement. The promoters, Dr. ARP and Dr. (Mrs.) AAP decided to shift the loan to another bank where interest would be lower (though marginally) and repayment period longer than what was sanctioned by Corporation bank, as Corporation bank was not willing to grant any concession. The entire balance term loan against hospital land and building of Rs.19 crore was shifted to Bank of Baroda on 28-04-2010 (FY2010-2011) which gave more period and charged slightly lower interest. The capital venture company (holding 49% in ONP where entire business was being cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decisions of Hon ble High Court of Bombay in the case of Srishti Securities Pvt. Ltd. (supra) and also Phil Corpn. Ltd. (supra). All that we have to examine is that whether the assessee availed any loan, whether the same has been utilized 1for the purpose of the business and any interest paid to the said loan. Once it is established that the interest paid is for a loan taken for business, then it is an allowable deduction. 21. We note that the assessee purchased shares held by the investor Venture Capital Company in ONP which was formed in 2007 by Dr. ARP and Dr. AAP of assessee in the ordinary course of its business. There is no dispute about the fact that the said purchase of shares held by investor Venture Capital Company in its own ONP to have control by the assessee. It was of the intention of the assessee, had the assessee not purchased the said 49% of the shares from the investor Venture Capital Company, its control would go into third party competitors and its interest for running the hospital could have been jeopardized. We note that the assessee borrowed a sum of Rs.43.30 crores from Saraswat Co-operative Bank amongst which utilized closure of construction loan accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee on account of interest payment. According to CIT(A) when the loans availed from Bank of Baroda and Saraswat Bank were utilized for the purpose of business, the assessee is entitled to claim deduction on account of processing fee as business expenditure. The relevant part at para 5.5.1 of impugned order is reproduced here-in-below : 5.5.1. Here the AO is referring to the para 4(a) of the assessment order wherein it is mentioned that a loan of Rs.43.30 crores was taken from Saraswat Bank. Out of Rs.43.30 crores, an amount of Rs.22.79 crores was used for purchase of shares of Oyster and Peal Hospital Pvt. Ltd. The remaining amount of loan of Rs.20.51 crores (43.30 cr. Minus 22.79 cr.) taken form Saraswat Bank was used for repayment of the term loan taken from bank of Baroda. From the records, it is seen that originally in the year 2006-07, the appellant company borrowed from Corporation Bank for the construction of hospital building, afterwards this loan was shifted to Bank of Baroda which offered lower rate of interest and extended loan repayment period. Later on, the appellant replaced this loan with Saraswat Bank in F.Y. 2010-11 relevant to AY 2011-12 (the year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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