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TMI Blog2016 (10) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... rent angle and therefore holding the order of the AO erroneous and prejudicial to the interest of Revenue. If that is allowed then there can be several dimensions to view the issue which has been overlooked by the AO at the time of assessment. Accordingly, the impugned order passed by AO after application of mind cannot be regarded as erroneous in so far prejudicial to the interest of revenue because the Ld. CIT will look the issue at different angle. The impugned order passed by AO is neither erroneous nor prejudicial to the interest of revenue. Therefore we find the impugned revision order unsustainable in law, and we, therefore, quash the same. The issue gets the relief accordingly. - Decided in favour of assessee. - ITA No.1248/Kol/2015 - - - Dated:- 24-8-2016 - Shri N.V. Vasudevan, Judicial Member, and Shri Waseem Ahmed, Accountant Member For The Appellant : Shri Kaushal Kumar Surana, CA, For The Respondent : Shri G. Mallikarjuna, CIT, DR ORDER PER Waseem Ahmed, Accountant Member:- This appeal has been filed by the assessee relating to assessment year (AY) 2010-11is against passed by Commissioner of Income Tax-3, Kolkata under the provision of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore these interest income were required to be excluded for the computation of exemption u/s 10AA of the Act. It was also observed by ld. CIT u/s 263 of the Act that the AO has not raised the issue of interest income in connection with the exemption claimed u/s 10AA of the Act. Thus, the ld.CIT issued notice on 22-03-2013 u/s. 263 to the assessee. In response to such notice, the assessee submitted that the assessee is engaged in the business of import of gold and export of jewelleries from its SEZ units. In the course of business, the assessee has to open Letter of Credit for the import of the gold for that they have made fixed deposits and pledged with the bank as margin money. At the same time, assessee borrowed money from the bank against the bill purchase of bills for the goods exported. Therefore, the borrowed money was partly used for making the FD as evident from the balance sheet for the year under consideration. Accordingly the interest income was earned by the assessee and interest expenditure was incurred in the course of its business. The interest paid by the assessee exceeds interest income. However, the ld. CIT disregarded the claim of assessee by holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. AR before us pleaded that the order of the AO has been merged with the order of the ld. CIT(A). Therefore the impugned order passed by Ld. CIT u/s 263 of the Act is not sustainable. Now the issue before us arises whether the order of AO has been really merged with the order of the Ld. CIT(A) in the aforesaid facts circumstances. From the facts, we find that the AO while allowing the exemption u/s 10AA of the Act objected that the certain expenses and interest income on FD claimed by the assessee have been wrongly apportioned to the different units of the assessee. On this issue, the assessee admitted the same and filed revised computation of income which was rejected by the AO in terms of Hon ble Supreme Court decision in the case of Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323(SC). The relevant extract of assessee submission before the AO is reproduced below : 7. In the written submission regarding the apportionment expenses, the assessee has also claimed that interest income from fixed deposit is also to be apportioned among different units as the FD was pledged as lien for obtaining loan. The relevant observation of the AO in his assessment order is reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ld. CIT(A) we find that the issue of income on FD has been duly dealt in the order of AO and subsequently by ld. CIT(A). The AO has not accepted the plea of the assessee for allocation of the interest income on FD interest expenses. This observation of the Assessing Officer, in our considered view, shows that the AO has admitted that the interest income on FD has direct link with the business and accordingly the same is eligible for deduction u/s 10AA of the Act. In the instant case, the impugned order passed by ld. CIT u/s 263 of the Act looks to the issue from different angle and therefore holding the order of the AO erroneous and prejudicial to the interest of Revenue. If that is allowed then there can be several dimensions to view the issue which has been overlooked by the AO at the time of assessment. Accordingly, the impugned order passed by AO after application of mind can be regarded as erroneous in so far prejudicial to the interest of revenue because the Ld. CIT will look the issue at different angle. Under the aforesaid facts circumstances the Hon ble ITAT Kolkata has decided the issue in favour of assessee in the case of Lok Nath PD Gupta Vs. DCIT 60 taxmann.co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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