| |
| The Tax Publishers2022 TaxPub(DT) 7030 (Mum-Trib) INCOME TAX ACT, 1961
Section 263
In the instant case, (1) when case of assessee was covered by binding decision of jurisdictional High Court, then there was no scope for holding assessment order to be erroneous and prejudicial to interest of revenue. (2) Before holding an order of assessment to be erroneous, Pr. CIT should conduct necessary enquiries or verification in order to show that finding given by AO was erroneous or he should show that view taken by AO was unsustainable in law. Non-examination of these factual aspects and non-application of binding decision of jurisdictional High Court on issue sought to be revised by PCIT would make impugned revision order unsustainable in law.
|
Revision under section 263 - Erroneous and prejudicial order - Lack of enquiry -
Assessment for year under consideration was completed by AO under section 143(3). PCIT examined assessment records and noticed that assessee had given interest free advances of Rs. 16.42 crores. He also noticed that assessee had incurred interest expenditure of Rs. 8.49 crores and earned interest income of Rs. 5.85 crores and accordingly claimed net interest expenditure of Rs. 2.64 crores in Profit and Loss account. PCIT took view that AO had not examined issue of non-charging of interest on loan of Rs. 16.42 crores given by assessee. He also took view that AO ought to have charged interest @ 12% on above said loan given by assessee. Accordingly, PCIT took view that AO had not carried out necessary enquiries on above said issue and there was complete non-application of mind on part of AO in not examining above said issue. Accordingly, he initiated revisionary proceedings under section 263. Hence, this appeal. Held: In instant case, a cursory glance of Balance sheet would show that assessee was having own funds, i.e., Capital balance of Rs. 75.74 crores, whereas interest free loan given by assessee was to tune of Rs. 16.42 crores only. Since own funds available with assessee far exceeds amount of interest free loan, no interest disallowance under section 36(1)(iii) was called for, as per the decision rendered by Jurisdictional Bombay High Court in case of Reliance Utilities and Power Ltd.. Admittedly PCIT had failed to examine these factual aspects and had also failed to follow binding decision of Jurisdictional High Court. When case of assessee was covered by binding decision of jurisdictional High Court, then there was no scope for holding assessment order to be erroneous and prejudicial to interest of revenue. Non-examination of these factual aspects and non-application of binding decision of jurisdictional High Court on issue sought to be revised by PCIT would make impugned revision order unsustainable in law. Accordingly, revision order passed by PCIT was quashed.
Relied on:Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2017-18
IN THE ITAT, MUMBAI BENCH
 SUBSCRIBE FOR FULL CONTENT
|