IN INCOME TAX APPELLATE TRIBUNAL BENCH BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 1774/Bang/2018 Assessment Year 2013-14 M/s. Karle Properties, Assistant No. 151, Industrial Suburb, Commissioner of Income Yeshwanthpur, Vs. Tax, Bangalore 560 022. Circle 6 (2) (1), PAN: AABFK1537B Bangalore. APPELLANT RESPONDENT Assessee by Smt. Suman Lunkar, CA Revenue by Shri Ujjwal Kumar, JCIT (DR) Date of hearing 13.08.2019 Date of Pronouncement 28.08.2019 ORDER Per Shri A.K. Garodia, Accountant Member This appeal is filed by assessee and same is directed against order of ld. CIT(A)-6, Bangalore dated 13.03.2018 for Assessment Year 2013-14. 2. grounds raised by assessee are as under. 1. learned Assessing Officer had erred in passing order in manner passed by him and learned CIT(A) has erred in confirming same. orders passed are bad in law and is liable to be quashed. 2. learned CIT(A) has erred in dismissing appeal filed by appellant against order passed u/s 143(3) of Act holding that: i) disallowance made in Order appealed against is only Rs. 3,357/- which was not challenged by appellant. ii) disputed disallowance of Rs.1,69,29,875/- was not made in assessment order while computing assessed income. iii) Such disallowance is made in order passed u/s 154 of Act iv) order passed U/s. 154 of I.T. Act, is separate order by itself and separate appeal would lie against such order. findings/conclusions drawn by learned CIT(A) being erroneous both on facts and law are to be disregarded. ITA No. 1774/Bang/2018 Page 2 of 4 3. learned CIT(A) ought to have appreciated fact that there is clear finding in assessment order regarding disallowance of Rs. 1,69,29,875/- u/s 36(1)(iii) of Act (though omitted to be added while computing assessed income) and appellant had rightly challenged such finding of disallowance in appeal filed by him. 4. In any case, assessing officer had erred in making various observations/ finding in course of passing assessment order. observations/ findings made are totally erroneous both on facts and law are to be disregarded. 5. learned assessing officer had erred in holding that interest of Rs. 1,69,29,875/-debited to Profit and loss account is not allowable u/s 36(1)(iii) of Act on ground that appellant has given interest free advances to sister concerns and others. On facts and circumstances of case and law applicable conclusions drawn being totally erroneous are to be disregarded. 6. appellant had rightly claimed interest as business expenditure as all borrowed funds were utilized for purpose of business only. finding of disallowance as made being erroneous is to be deleted and interest as claimed is to be allowed as deduction. 7. In any case, advances given to sister concerns and other are out of business expediency and further there are sufficient free funds to support such advance and therefore also finding as given by Assessing Officer in Assessment order was erroneous. 8. learned Assessing Officer had also erred in holding that alternatively as per recast profit and loss account, interest needs to be capitalized. Assessing Officer has & not made out of any recasted profit and loss account at all. observation/findings of Assessing Officer being without basis, totally erroneous on facts are to be rejected. 7. appellant denies liability to pay Interest U/s. 234A, 234B and 234C of I.T. Act, 1961. interest having been levied erroneously is to be deleted. 8. In view of above and on other grounds to be adduced at time of hearing, it is requested that impugned order passed be quashed or at least finding of disallowance u/s 36(1)(iii) of Act be deleted and interest levied under various sections be also deleted. 3. It was submitted by ld. AR of assessee before us that it is stated by ld. CIT(A) in para 8 of his order that order passed by AO u/s. 154 is separate order and hence, if addition made in this order is to be challenged, separate appeal has to be filed by assessee and for addition made in ITA No. 1774/Bang/2018 Page 3 of 4 order u/s. 154 by AO, ground cannot be raised in appeal filed by assessee against order passed by AO u/s. 143(3) of IT Act. He submitted that appeal of assessee against order passed by AO u/s. 154 is pending before ld. CIT(A) and hence, issue involved in this appeal may also be restored back to file of ld. CIT(A) for simultaneous decision. ld. DR of revenue supported order of ld. CIT(A). 4. We have considered rival submissions. First of all, we reproduce para no. 8 from order of ld. CIT(A). This reads as under. 8. It is seen that AO in assessment order u/s 143(3), dated 09/03/2016, made addition of Rs.3,357/-.The appellant has not challenged addition of Rs.3357/-. appellant has stated that AO has passed order u/s 154, suo motto, rectifying impugned order u/s 143(3) where he has made addition of Rs.1,69,29,875/- and challenged same in this appeal. This order u/s 154 is not brought on record. order u/s 154 is separate order by itself and additions therein, if challenged, has to be done so by separate appeal. appellant has not done this. order u/s 143(3) stands confirmed. 5. We have also gone through assessment order passed by AO u/s. 143(3) on 09.03.2016 and we find that in this order, AO has made addition of only Rs. 3,357/- and no ground is raised by assessee against this addition of Rs. 3,357/- before ld. CIT(A) or before us. issue in dispute before us in this appeal is regarding addition of Rs. 1,69,29,875/- and we find that on page no. 2 of assessment order, AO has discussed about this claim of assessee for deduction of Rs. 1,69,29,875/- as interest expenditure and AO has observed on this page of assessment order that even if entire debit were to be considered under above recast profit and loss account for business conducted, entire interest will have to be capitalized along with closing work in progress shown. Even after making such observations, no addition has been actually made by AO in computation of income on this page of assessment order. It has been stated by assessee before ld. CIT(A) and before us that subsequently, AO passed order u/s. 154 suo moto and in that order, this addition was actually made by AO and assessee has also filed appeal against order passed by AO u/s. 154 and this appeal is pending before ld. CIT(A). Considering all facts as discussed above and particularly ITA No. 1774/Bang/2018 Page 4 of 4 in view of this fact that AO has discussed in assessment order passed by him u/s 143 (3) against which present appeal is filed, there is discussion about this issue in respect of disallowance of Rs. 1,69,29,875/- although actual addition was not made in this order but made in order passed by AO u/s 154, we feel it proper to restore this matter back to file of ld. CIT(A) for simultaneous decision along with appeal filed by assessee against order passed by AO u/s. 154 of IT Act. We order accordingly and we do not make any comment about merit of case. 6. In result, appeal filed by assessee is allowed for statistical purposes. Order pronounced in open court on date mentioned on caption page. Sd/- Sd/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) Judicial Member Accountant Member Bangalore, Dated, 28th August, 2019.Copy to 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, Income Tax Appellate Tribunal, Bangalore. Karle Properties v. Assistant Commissioner of Income-tax, Circle6(2)(1), Bangalore