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TMI Blog2015 (10) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... nd bad ab initio, as the order of assessing officer is neither erroneous nor prejudicial to the interest of revenue. b. The learned CIT grossly erred in reviewing the order passed by Assessing officer which was clearly beyond her powers u/s. 263 of the Income Tax Act, 1961. c. The learned Commissioner of Income-tax has passed the order ignoring the fact that the points raised in his notice have duly been examined by the learned Assessing Officer during the course assessment proceedings. d. The learned Commissioner of Income-tax has passed the order ignoring the fact that the points raised in his notice have duly been examined by the learned Assessing Officer during the course assessment proceedings. Without prejudice to the foregoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced interest free loans and advance for aggregate amount of Rs. 15.79 crores, whereas the assesse had not offered any interest income in respect of loans and advances given by it. The Ld. CIT gave further show cause notice, asking the assessee to furnish documentary evidences to show that advances were made out of own funds and to show business exigency for giving such interest free loans. Ld. CIT gave further notice to the assessee dated 14.12.2012 on the ground that the disallowance made by the AO in the aforesaid assessment order under rule 14A r.w. Rule 8D is not sufficient, as perusal of para 4.5 of the assessment order revealed that AO has accepted the contention of the assessee that no interest expenditure was incurred in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hearing before us, Ld. Counsel of the assessee made detailed submissions. First submission of Ld. Counsel was that Ld. CIT has fell into grave error by not appreciating the facts correctly and committed a mistake by not appreciating the fundamental facts that own funds of the assessee were far in excess of amount of advance given, and in the given facts no disallowance was called for either u/s 14A or any other provision more so, in view of the judgment of jurisdictional High Court in the case of CIT vs. Reliance Utilities & Power Limited 313 ITR 340 (BOM). It was submitted that assessment order passed by the AO was very much in accordance with law, as explained by Hon'ble jurisdictional high court. It was further submitted by the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed u/s 263. It is seen by us that vide questionnaire dated 8th June 2011, the AO asked the assessee to furnish the details with regard to loans, rate of interest, their confirmation, their utilization, disallowance to be made u/s 14A etc. In response to the same, the assessee had filed detailed reply vide its letter dated 15th July 2011 in which the assessee submitted details with regard to disallowance u/s 14A and for allowability of interest expenses. The assessee also submitted copy of loans agreement with HDFC Bank and other exhaustive details were filed by the assessee before AO. After considering all these replies and evidences of the assessee, the AO had passed detailed order u/s 143(3). It is noted by us that in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan from HDFC Bank was specifically taken by the assessee for the purpose of procuring raw material i.e. Castor Seeds. This fact is cross verified with the help of sanction letter of the said bank enclosed at page 54 of the paper book. This vital fact has been accepted by the Ld. CIT at page 9 of the impugned order passed u/s 263 of the Act. Once this fact is on record and stands uncontroverted till date, then it can be safely said that the loan has been utilized for the purpose of the business of the assessee and consequently the deduction of interest will be allowable u/s 36(2)(iii) of the Act and therefore, question of applicability of section 14A would not arise. The assessee has been submitting since the time of original assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st is allowable as deduction. 8. Further, at the cost of repetition, as also discussed in earlier paras above, certainly, it is a case where one of the possible views was taken by the AO in the assessment order passed u/s 143(3) and thus assessment order was beyond perview, of section 263 on the facts of the case. We derive further support from the land mark judgments of Hon'ble Supreme Court in the case of CIT v. Max India Ltd. (2007) 295 ITR 282(SC) and Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83(SC), wherein it was held that where two views were possible and AO had taken one of the possible views then the assessment order cannot be treated as erroneous and prejudicial to the interest of Revenue. 9. In view of the aforesaid discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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