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2025 (3) TMI 642 - AT - Income TaxRevision u/s 263 - as per CIT AO failed to verify and examine the claim of Bonus interest accrued but not due on loans from PFC and Amount transferred to Profit Loss Account in respect of Capital Grants Subsidies and Consumer Contribution - HELD THAT - It is clearly evident from the facts noted by us regarding the enquiry conducted by the AO on the issue of bonus that the finding of the Ld.PCIT that the assessee has now furnished certain fresh details which were not considered by the AO is blatantly incorrect and false. All explanations with evidences demonstrating the fact of bonus having been paid before due date of filing of return of income was furnished to the AO during assessment proceedings itself. Therefore the finding of the PCIT that the assessee has now furnished fresh details which needed to be looked into by the AO and verified is found to be incorrect by us. We agree with the assessee that even on merits no disallowance of bonus amounting to Rs. 2.02 crores was called for since the assessee had established both to the AO and the PCIT that the assessee had not claimed the said amount as an expense in violation of provisions of section 43B having paid the same before the due date of filing the return of income which fact was certified by the Tax Auditor in its Tax Audit Report. The bonus was clearly demonstrated to be not unpaid. DR was unable to controvert the factual contention of the Ld.Counsel for the assessee b both with regard to the examination of the impugned issue by the AO and the fact of the assessee having demonstrated both to the AO and the Ld.PCIT of the bonus not remaining unpaid but in fact paid before the due date of filing of return of income. DR was unable to point any infirmity accordingly in the allowance of claim of Bonus of Rs. 2.02 Crs by the AO in terms of the provisions of section 43B of the Act. Therefore we hold that the AO had taken a legally correct view by not making any disallowance of bonus expenses. Allowance of interest expenses paid on PFC loan (RAPDRP) against in alleged violation of provisions of section 43B on account of the same having remained unpaid - Only explanation given by the assessee vis a vis the unpaid interest expense not being disallowable u/s 43B of the Act is that it had not become due for payment and therefore could not be disallowed on account of remaining unpaid. We fail to understand how this explanation justifies the case of the assessee of the unpaid interest not being disallowable u/s 43B. There is no dispute with regard to the position of law u/s 43B of the Act allowing such interest payments only on payment basis . In the light of the clear position of law we fail to understand how an unpaid interest even if not accrued for payment is allowable. No judicial decisions to support the contention of the assessee was filed at any stage i.e the AO the Ld.PCIT or even before us. Therefore it is evident that the AO had not examined the issue of allowability of unpaid interest in the light of the provision of law u/s 43B of the Act and neither has the assessee been able to demonstrate allowability of the same u/s 43B of the Act. The findings of the Ld.PCIT therefore of the assessment order being erroneous so as to cause prejudice to the Revenue for allowing unpaid interest on PFC loans in violation of the provisions of section 43B of the Act is therfore upheld. Capital Grants Subsidies and Consumer Contribution written back by the assessee on account of which addition was made by the AO but was found to be short by the Ld.PCIT - We do not find any merit in the finding of error by the Ld.PCIT on the issue of write back of capital grants and consumer contribution being short. The assessee we have noted has not furnished any fresh detail to the Ld.PCIT but in fact he has pointed out to him the incorrect facts noted by him while arriving at this finding of the error on this issue. He had categorically pointed out from the facts on record the incorrect fact noted by him of the amount written back by the assessee in its Profit and loss account and had demonstrated the correct figures from the records itself . The assessee had also demonstrated that factually there was no shortfall in the amount of grants and contribution written back. DR was also unable to controvert the factual contention of assessee. Thus we uphold the order of the PCIT finding error in the order of the AO causing prejudice to the Revenue only on the issue of unpaid interest on PFC amounting to Rs. 17.91 Crs being allowed without not being examined by the AO - Decided in favour of assessee Partly.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment were:
2. ISSUE-WISE DETAILED ANALYSIS Unpaid Bonus Allowance
Interest Accrued but Not Due on PFC Loans
Capital Grants & Subsidies and Consumer Contribution
3. SIGNIFICANT HOLDINGS
In conclusion, the Tribunal partly confirmed the Ld.PCIT's order, allowing the appeal of the assessee in part.
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