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TMI Blog2024 (9) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... 86,070/-. During the course of assessment proceedings, the AO noted from the profit and loss account that the Revenue from operations is shown at Rs. 44,27,44,823/-, The above said Revenue from operations was shown as "Other Income". After considering the expenses debited to the profit and loss account, the net result disclosed is a profit of Rs. 5,17,626/-. From the total expenses debited of Rs. 44,22,27,197/-, he noted that the major expenditure claimed is on account of the Finance Cost which is claimed at Rs. 44,22,03,215/-. From the various details furnished by the assessee, he observed that assessee has borrowed Long Term fund amounting to Rs. 135,27,00,000/- in the F.Y. 2010-11 on interest @12.16% per annum for the purpose of its project. Since the project did not materialize till now, therefore, the borrowed funds were given as Loans and Advances to its sister concern M/s. Kumar Snew Developers Pvt. Ltd. for interest @12%. He noted that the assessee during the year under consideration has restructured the loan scheme and repaid the entire amount borrowed for which the assessee had also paid restructuring charges of Rs. 4,44,92,090/-. Thus, the assessee has paid a total amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation for the difference in the rate of interest, the difference between interest paid and interest received requires to be disallowed. The AR also agreed to this disallowance. Accordingly, an amount of Rs. 80,21,369/- is disallowed and added to the total income of the assessee." 5.2 As per provisions of sections 246A an appeal can be instituted only if the appellant is aggrieved by the order mentioned in that section. Order u/s 143(3) is one such order against which appeal can be filed. However, in case of an addition which has been agreed by the AR of the appellant at the time of assessment proceedings, it cannot be successfully argued that assessee is agreed by the order. In other words, no cause of action arises out of the impugned order. In deciding so, apart from the plain words of the Act itself, I rely upon the authority of Allahabad High Court in the case of Sterling Machine Tools vs. CIT 123 ITR 181 (All.), Madras High Court in the case of Ramanlal Kamdar vs. CIT 108 ITR 73 (Mad) and that of jurisdictional High Court of Bombay in the case of Rameshchandra & Co. vs. CIT 168 ITR 375 (Bom.). In view of the above the present appeal is rejected at its threshold. 5.3 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement in assessment and unless the assessee points out that it was under mistaken belief of law, no appeal can be filed. However, in the instant case, the issue is purely legal and since the assessee can demonstrate that the addition was agreed under mistaken belief of fact or law, the said decision cannot be applicable to the facts of the present case. 9. The ld. Counsel for the assessee submitted that the assessee in the instant case has raised the funds which were advanced to its 100% wholly owned subsidiary. The assessee had charged interest and restructuring charges but there was short recovery of Rs. 80,21,369/-, the reasons of which were also explained as per page 61 of the paper book which is due to the number of days, i.e. while making the payment of interest to FMO as 360 days which is as per the agreement whereas the assessee while recovering the same from the subsidiary company has considered the total interest period of 366 days as the F.Y. 2015-16 was a leap year. 10. Referring to the decision of Hon'ble Supreme Court in the case of S.A. Builders Ltd. reported in 288 ITR 1, he submitted that the Hon'ble Supreme Court has held that where funds are advanced by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court in the case of Swami Krishnanand Govindanand Vs. Managing Director, Oswal Hosiery reported in (2002) 3 SCC 39 has held that 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. 15. We find the Hon'ble Supreme Court in the case of C.M. Arumugam Vs. S. Rajgopal reported in (1976) 1 SCC 863 has 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. 16. We find following the above decisions, the Coordinate Bench of the Tribunal in the case of DCIT Vs. M/s.Phadnis Clinic Pvt. Ltd. (supra) while deciding an identical issue at para 8 and 9 of the order has observed as under : "8. Heard both the parties and perused the material available on record. The ld. DR vehemently contended that the assessee has no right to agitate before the CIT(A) as well as this Tribunal regarding the disallowance made by the AO on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn therefrom. Even a concession on facts disputed by a respondent in its written statement cannot bind the respondent. Thus, in Swami Krishnanand Govindananad v. Managing Director, Oswal Hosiery (Regd.) [(2002) 3 SCC 39, this Court held: "2. ....... It appears that when the case was posted for trial, the learned counsel appearing for the respondent conceded the facts disputed by the respondent in his written statement before the Court. That statement of the advocate was recorded by the Additional Rent Controller thus: "The respondent's learned counsel has admitted the ground of eviction and also the fact that the applicant is a public charitable institution and for that purpose it required the premises." .......... 3. .......... Whether the appellant is an institution within the meaning of Section 22 of the Act and whether it required bona fide the premises for furtherance of its activities, are questions touching the jurisdiction of the Additional Rent Controller. He can record his satisfaction only when he holds on these questions in favour of the appellant. For so holding there must be material on record to support his satisfaction otherwise the satisfaction not based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of any industry in the course of or for the purpose of conducting the industry contracts with any person for the execution by or under such person of the whole or any part of any work which is ordinarily part of the industry, the owner of such industry;" 9. Therefore, the finding rendered by the Hon'ble Supreme Court in the case of Bharat Heavy Electricals Ltd. (supra) by referring to decisions in the cases of Swami Krishnanand Govindananad (supra) and C.M. Arumugam (supra) is applicable to the facts on hand and we hold a concession made by the authorized representative before the AO in the assessment proceedings cannot preclude the assessee in reagitating the same point in the appeal. Therefore, we are unable to accept the contention of ld. DR in submitting that the assessee has no role to challenge the disallowance made on the admission of assessee before the CIT(A)." 17. In view of the above decisions of the Hon'ble Supreme Court cited (supra) and the decision of the Coordinate Bench of the Tribunal cited (supra), the decision relied on by the ld. CIT(A) in our opinion is distinguishable and not applicable to the facts of the present case. 18. So far as the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 36(1)(iii) of the IT Act, 1961. 14. 1 find, the Hon'ble Bombay High Court in the case of Reliance Communications Infrastructure Ltd. (supra) has held that where the assessee, for furthering its business had utilized borrowed funds for making investments in its subsidiary company and for making interest free advances to a related company, no disallowance of interest paid on borrowed funds could be made. I find, the Hon'ble Supreme Court in the case of Hero Cycles (P.) Ltd. (supra) has held that once it is established that there is nexus between expenditure and purpose of business, Revenue cannot justifiably claim to put itself in the arm chair of businessman or in position of Board of Directors and assume role to decide how much is reasonable expenditure having regard to circumstances of case. The various other decisions relied on by the Id. Counsel for the assessee in the case law compilation also supports the case of the assessee to the proposition that where interest free advances made to a wholly owned subsidiary company, no disallowance of interest paid on borrowed fund could be made. Since, in the instant case, admittedly, the assessee has extended funds to its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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