The court allowed the deduction of interest on borrowed funds under Section 36(1)(iii), emphasizing the necessity for established business use of capital, reinforcing that funds diverted to subsidiaries for business purposes do not negate the allowance.

ORDER PER MANJUNATHA G. :

The above appeal has been filed by the Assessee against the order dated 23.02.2024 of the learned CIT(A)- National Faceless Appeal Centre [in short the “NFAC”], Delhi, relating to the assessment year 2018-2019.

2. CA, K.C. Devdas, Learned Counsel for the Assessee at the very out-set submitted that, there is a delay of 321 days in filing the appeal before the Tribunal. The assessee had filed affidavit explaining the reasons for condonation of the delay in filing the appeal before the Tribunal. It was the submission of the assessee that, due to the resignation of the concerned officer in charge of the taxation matters whose mail and mobile number were registered on the e-filing portal and since the assessee has not received information from the said officer, the assessee could not file the appeal before the Tribunal within the due date. He submitted that, he intends to settle the dispute under Vivad Se Vishwas Scheme and after multiple attempts, he got the mobile no. of the concerned officer and thereafter, he came to know that the appeal filed before the learned CIT(A) was already dismissed in the month of February, 2024. Thereafter, the assessee immediately engaged the Counsel to file an appeal before the Tribunal. In this process, there is a delay of 321 days in filing the appeal before the Tribunal which is neither intentional nor wanton, but, due to the circumstances beyond the control of the assessee. The Learned Counsel for the Assessee, accordingly, pleaded that the delay of 321 days in filing the appeal before the Tribunal may please be condoned in the interest of substantial justice.

3. Shri B Bala Krishna, learned CIT-DR, on the other hand, strongly opposed for condonation of the delay of 321 days in filing the appeal before the Tribunal. He submitted that, the reasons furnished by the assessee are vague and, therefore, he submitted that, the delay in filing the appeal before the Tribunal should not be condoned.

4. We have heard both the parties and perused the affidavit filed by the assessee explaining the reasons for condonation of delay of 321 days in filing the appeal before the Tribunal. We find that, the Hon’ble Supreme Court in the case of Collector, Land Acquisituon vs., MST Katiji [1987] 167 ITR 471 (SC) has laid down certain principles for condoning the delay and also directed the lower courts to follow a lenient approach for condoning the delay. Going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra), there is no dispute if an appeal is dismissed on account of technicalities, a meritorious case may be thrown-out of judicial review. Therefore, while condoning the delay, the courts must have a liberal approach or lenient approach considering the reasons given by the petitioners or appellants. Therefore, going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra) and also considering the reasons explained by the assessee in his affidavit, we condone the delay of 321 days in filing the appeal before the Tribunal and admit the appeal for adjudication.

5. Brief facts of the case are that, the assessee- company is engaged in the business of development, construction and operation of power generation projects, filed it’s return of income for the assessment year 2018- 2019 on 16.08.2019 declaring Rs.NIL income, after claiming current year loss of Rs.155,67,78,798/-. The assessee company filed it’s revised return of income on 31.10.2018 declaring total income at Rs.NIL after claiming current year loss of Rs.155,67,78,798/-. The case of the assessee company was selected for