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Judgment
S.V. Maruthi, J.—This is an application filed u/s 256(2) of the Income Tax Act.
The facts in brief are as fellow''s:
For the assessment year 1989-90 the Assessing Officer processed the return u/s 143(1)(a) and sent an intimation after making an adjustment of Rs.1,44,386/-towards disallowance of guest house expenses and depreciation. Thereafter, the Assessing Officer noticed that the Respondent-Assessee had claimed a sum of Rs.5,74,51,894/- as interest on borrowings from financial institutions. He found that the total interest outstanding on 31-03-1989 towards interest accrued and due was Rs.5,94,81,774/-. Out of this an amount of Rs.4,01,40,910/- due upto 30th June, 1988 was funded and the balance was not funded and was outstanding as the amount due to be paid to the financial institutions. He therefore, issued notice u/s 154 and disallowed the interest due and outstanding as on 31-03-1989 pertaining to the assessment year 1989-90 in respect of loans which were not paid and funded before the due date for filing the return of income u/s 43B.
On appeal, the addition was confirmed by the C.I.T. The Income Tax Appellate Tribunal on a further appeal by the Respondent-Assessee cancelled the order u/s 154 passed by the Assessing Officer holding that this was not a fit case for invoking the provisions of Section 154 as the issue involved was highly debatable. The revenue sought a reference of the two questions:
"Whether, on the facts and in the circumstances of the case, the 1TAT was correct in law in cancelling the order passed by the Assessing Officer u/s 154, holding that it was not a fit case for invoking the provisions of Section 154 and disallowing the amount u/s 43B of the Income Tax Act.?"
"Whether, on the facts and in the circumstances of the case, the ITAT was correct in law in cancelling the order passed by the Assessing Officer u/s 154 and allowing the appeal of the assessee?"
Which the Tribunal refused. Hence, the application u/s 256(2) of the Income Tax Act.
Evidence was produced before it" funding the balance of the amount also. In view of the funding of the balance of the amount, the questions of wrongly allowing the deduction regarding interest does not arise, by virtue of the funding the amount is deemed to have been paid. In view of the above the Tribunal is right in its finding that it is not a case where the Assessing Officer should have invoked the power u/s 154 of the Income Tax Act.
It is true that the funding of the balance amount of interest was not available before the Income Tax Officer, and, it was produced only before the Tribunal. The fact that it was produced before the Tribunal does not debar the Tribunal from giving effect to it. We may also refer in this context the circular issued by the C.B.D.T. 669 dated 25th October, 1993. The relevant portion of the circular is extracted hereunder:
"Where the sums referred to in the first proviso u/s 43B had in fact been paid on or before the due dates mentioned therein, but the evidence therefore had been omitted to be furnished along with the return, the Assessing Officers can entertain applications u/s 154 for rectification of the intimations u/s 143(1)(a) or Orders u/s 143(3), as the case may be, and decide the same on merits.-Circular No.581 dated 28-9-1990 stands modified to the above extent. - Circular No.669, dated 25-10-1993."
In view of the above, the Tribunal is right in taking into account the subsequent evidence that was produced before it and holding that the Income Tax Officer is not justified in invoking the power u/s 154 of the Act. Accordingly, the I.T.C is dismissed.