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TMI Blog2014 (7) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by the CIT does not arise - when the very basis of levy is subject matter of appeal, the CIT could not have invoke the jurisdiction u/s 263 in opining that higher amount should have been considered for levy of interest - there is no basis for CIT invoking jurisdiction u/s 263 - thus, the order of the CIT is set aside – Decided in favour of Assessee. - ITA.No.750/Hyd/2013 - - - Dated:- 9-7-2014 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Mr. K. C. Devdas For the Respondent : Mr. M. Jagdish Babu ORDER Per B. Ramakotaiah, A. M. This appeal is by the assessee against the Order of the CIT under section 263 of the Income Tax Act, 1961 dated 25.03.2013 invoking the jurisdiction and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 263. However, CIT vide his para 3 extracted the amounts advanced and opined in para 4 that A.O. should have consider the above amount of ₹ 34.83 crores for the purpose of calculation and charging of interest. He came to the conclusion that interest has been under-assessed. Accordingly, he set aside the assessment order with a direction to re-compute the income of the assessee company after making necessary verification of the issue. 3. Questioning the above order of the CIT under section 263, assessee raised five grounds all pertaining to the issue of jurisdiction and levy of interest. 4. Ld. Counsel submitted that the very levy of interest as was done by the A.O. was subject matter of appeal before the Ld. CIT(A) and subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vances and would also consider the liability of M/s. SCSL to pay interest thereon and the rate of interest at which the advances should be repaid. Therefore, unless and until the liability to pay the advances and the rate of interest at which the temporary advances are to be repaid is determined by the Civil Court, it cannot be said that the same has accrued or arisen to the assessees. However, if the assessees had advanced interest bearing funds as interest free advances, the interest paid by the assessees towards such borrowed funds would have to be disallowed and treated as the income of the respective assessees. The Hon ble Punjab and Haryana High Court in the case of Abhishek Industries (supra) has held that the nexus between the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvanced. Assessee has not advanced the funds on interest basis and subsequently, it filed recovery of principal amount with interest at 18% by filing a suit in City Civil Court, Hyderabad. This is the basis for A.O. to make an addition on notional basis. This matter was already considered and decided in favour of the assessees in the group by the ITAT in the above referred case with a direction that the amount of interest can be brought to tax in the year in which the City Civil Court considered and decided the liability to repay the amounts of advance and interest thereon and also rate of interest on which, advance should be repaid. In these circumstances, the question of bringing to tax interest on different amounts as directed by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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