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TMI Blog2012 (9) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 80IA - Held that:- The assessee was sanctioned term loan on 20-5- 2004 and disbursement of the loan started from September, 2004. It is also seen that by the time the loan was taken the assessee has started generating income from windmill, thus it is necessary to find out whether the loan was taken for the windmill project. Since the CIT has not brought any material on record which could suggest that the concerned loan was taken for windmill project it is proper to set aside the order of the CIT and direct the AO to examine the end utilisation of loan amount - in favour of assessee for statistical purposes. Direction for applicability of section 40a (ia) - Held that:- If any amount remains payable on the date of balance sheet on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has challenged the order of the CIT passed u/s 263 raising following grounds: 1. The order passed by the ld. CIT (A) u/s 263 for the assessment year 2006-07 is arbitrary, opposed to the principles of natural justice, law, facts and probabilities of the case and is beyond his jurisdiction. 2. The ld. CIT failed to note that the assessment order passed by the AO was neither erroneous nor prejudicial to the interest of the revenue hence the ld. CIT is not justified in setting aside the original assessment order. 3. The CIT has no jurisdiction to pass order u/s 263 as he has not given any conclusion regarding the order being either erroneous or prejudicial to the interest of revenue and he cannot pass such orders for making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a company with the trust has been mentioned. 10. The CIT ought to have considered that powers u/s 263 conferred only to set right the distortions and not to review the order of the AO. 11. The ld. CIT has not applied his mind in making the revision order to set aside the assessment as he had failed to examine all the facts on records which are correctly and properly verified by the AO. 12. The ld. CIT does not have any material that enables him to come to the conclusion that the order of the AO is erroneous to be prejudicial to the interests of the revenue. 13. The revision order passed by the ld. CIT is not justified on the above grounds and has to be cancelled. 14. For these and other grounds of appeal that may be permitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmining the total income at Rs.2,88,92,567/-. The CIT invoking his jurisdiction u/s 263 called for the relevant assessment records and after examining the records, was of the pinion that the assessment order passed was erroneous and prejudicial to the interests of revenue. The CIT therefore issued a show cause notice to the assessee. The CIT on going through the records found that the AO has allowed deduction claimed u/s 80IA of the Act at Rs.13,49,408 in respect of windmill without deducting the interest payment of Rs.18,27,037/- in respect of the loan on windmill project, depreciation and maintenance expenditure from the income earned from the windmill. The CIT therefore directed to deduct the interest on loan, depreciation and maintenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no relation with windmill. It was contended that windmill started generating w.e.f. 31-3-2004. Inviting our attention to page-12 of the paper book, the learned AR contended that the loan was granted on 25-5-2004 and was disbursed in September, 2004. Inviting our attention to pages 6 and 7 of the paper book, the learned AR contended that the payment towards power project was made during financial year 2003-04, therefore the interest payment on the loan taken from Bank of Baroda has no connection with windmill project. The learned AR further contended that the assessee has started generating income from windmill during the financial year 2004- 05 and by the time the loan was taken from Bank of Baroda, the windmill had already started gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheet on which tax was not deducted at source only that amount can be disallowed by invoking provisions contained u/s 40a(ia). This is also the view of the ITAT, Vizag Bench in the case of Merlin Shipping Transports, Visakhapatnam vs. Addl. CIT, Visakhapatnam in ITA No. 477/Vizag/2008 dated 9-4-2012. We therefore direct the AO to examine the facts and find out whether the amount has been paid within the relevant previous year or remains payable on the date of balance-sheet. If the amount has been paid within relevant financial year, no disallowance can be made u/s 40a(ia) of the Act. 9. Ground No. 9 relates to direction of the CIT to the AO to examine the applicability of section 40A (2)(b) with regard to purchase of film Soggad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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