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TMI Blog2016 (7) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance has been worked out by the Ld. CIT(A) at ₹ 72,83,333/-. It was explained that there is no diversion of funds to related parties other than normal business transaction and the amount shown as advance to Koyenco Autors (P) Ltd. is in the nature of rent advance and classified under “Loans & Advances”. The building belongs to them and the assessee is pay in grent of ₹ 60 lakhs for that building. The building is used as show room and service centre. As regards advance in the name of the Director, it was in connection with business requirements of the Company and the loan advances were not paid out of borrowed funds. The Assessing Officer was satisfied that there was no diversion of funds during the assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was absent in the appellant s case. 3. The learned Commissioner of Income Tax ought to have met the objections of the appellant and thereafter concluded that, there was error in the order passed by Assessing Officer, causing prejudice to the department. Having not done so, order u/s. 263 is bad in law. 4. The learned Commissioner of Income Tax erred in not entering into a finding as to how interest bearing funds were diverted to sister concerns. Mere mention that there is diversion is bad in law. 5. The learned Commissioner of Income Tax ought to have appreciated that the advance to the sister concern was in the nature of rent advance, as the building of the sister concern was used as showroom and service centre. This fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned AR. The assessee is paying heavy interest to financial institutions for acquiring capital assets and for working capital requirement and at the same time lending to related parties interest-free. As such, proportionate interest is leviable and the same has not been looked into by the Assessing Officer while making assessment inadvertently. 6. In the light of the above, by invoking the provisions of section 263 of the Income Tax Act, 1961, the assessment order dated 06/03/2013 is set aside as it is prejudicial to the interest of revenue and I direct the Assessing Officer re do the assessment by incorporating the above direction and pass a fresh assessment order. 5. The Ld. Counsel for the assessee, Shri R. Krishnan, CA relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Tata Finance Car Loan (5000333104-India DI 2,00,112.27 3,00,600.00 HDFC-Inventory Floor Funding 3,82,53.329.23 - Total 4,98,78,531.20 74,87,709.00 Schedule-4 Unsecured Loan: F.Y. 2009-10 Rs. Ps F.Y. 2008-09 Rs. Ps. Tata Capital Car Loan (7000058961-X6) 53,63,211.60 - Gokulam Chits - 3,44,167.00 ICICI Car Loan X5 - 60,28,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led are basically for specific purposes like purchase of assets, i.e., cars and it was explained that HDFC Inventory Floor Funding amounting to ₹ 382.33 lakhs was sanctioned during the year for the purpose of purchase of goods and the corresponding interest for the loan availed is only ₹ 10,81,911/- which is marked in Schedule-15. Whereas, the proportionate interest disallowance has been worked out by the Ld. CIT(A) at ₹ 72,83,333/-. 7. It was explained that there is no diversion of funds to related parties other than normal business transaction and the amount shown as advance to Koyenco Autors (P) Ltd. is in the nature of rent advance and classified under Loans Advances . The building belongs to them and the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be satisfied. The Hon ble Supreme Court in the case of CIT vs. G.M. Mittal Stainless Steel (P) Ltd.(2003) 263 ITR 255 has observed that the satisfaction by the Commissioner mustbe one objectively justifiable and based on material either legal or factual when available and it cannot be mere ipse dixit of the Commissioner. 9. Though we have held that the view taken by the Ld. CIT(A) is not a correct view, but even if one possible view is taken by the Ld. CIT(A), then there aretwo views possible and the Assessing Officer has taken one of the views permissible in law and in such circumstances, the view held by the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT 109 Taxman 66where two views are possible and the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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