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TMI Blog2021 (1) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of revenue that the decision of Directorate of Income tax (L R), CBDT or Principal CIT is not binding on Tribunal is fair that the decisions of Directorate of Income tax (L R), CBDT or Principal CIT is not binding on Tribunal, however, those decision are binding on Principal CIT and learned DR of revenue. Once, the order of High Court on identical issues for assessment year 2009-10 is accepted by higher authorities of revenue, now it is not open for learned DR for revenue or to learned PCIT to deviate from such decisions. Thus, in our view the contention of learned DR is misplaced. - Decided in favour of assessee. - I.T.A No.385/SRT/2018 - - - Dated:- 4-12-2020 - Shri Pawan Singh, Hon'ble Judicial Member And Dr. Arjun Lal Saini, Hon'ble Accountant Member For the Assessee : Shri Gopala Krishnan CA For the Revenue : Shri S.T.Bidari CIT(DR) ORDER PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the Assessee is directed against the order of Learned Principal Commissioner of Income Tax (PCIT), Valsad, dated 31.03.2018 passed order under section 263 of the Income Tax Act, 1961 for the A.Y. 2011-12. The assessee raised the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed the draft assessment order under section 143(3) read with 144C(3) on 23rd December 2015. The assessee exercise its option to file objection before dispute resolution penal (DRP) on various additions/adjustments suggested or made by the assessing officer. The DRP passed its directions vide its order dated 29.10.205. Consequent on receipt of the direction of DRP, the assessing order passed final assessment order under section 143(3) read with section 144C(13) dated 04th December 2015. 3. The assessment order was revised by learned Principal Commissioner of Income tax vide his order dated 31st March 2018, passed under section 263 of the Income tax Act. The learned PCIT before revising the assessment order issued show cause notice under section 263 dated 23rd March 2018 by taking view that the assessment order passed by assessing officer is prime facia erroneous and prejudicial to the interest of revenue. The learned PCIT should show cause notice under section 263 on 23rd March 2018 by fixing the date of hearing on 27th March 2018. In the show cause notice the learned PCIT mentioned that the assessee has shown interest payment of ₹ 2.88 crore to the foreign banks. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order after affording opportunity to the assessee. Aggrieved by the order of Ld. PCIT, the assessee has filed present appeal before this Tribunal. 5. We have heard the submission of learned Authorised Representative (AR) of the assessee and the learned Commissioner of income tax-/learned departmental representative (Ld. CIT-DR/ DR) for the revenue and have gone through the orders of lower authorities. The learned AR for the assessee submits that the grounds of appeal raised in the present appeal is directly covered by the decision of Hon ble Gujarat High Court in assessee s own case for assessment year 2009-10 wherein similar show cause notice under section 263 was challenged by the assessee in a Special Civil Appeal No. 4036 of 2016 and the show cause notice for assessment year 2009-10 was set aside. The learned AR for the assessee further submits that similar notices under section 263 were issued for assessment year 2012-2013, 2013-2014 and 2014-2015. The learned PCIT vide separate orders dated 6th March 2019 dropped the proceeding for all three subsequent years. The copy of order dated 6th March 2019 is placed on record. The learned AR for the assessee submits that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruing to the subsidiary company is separately taxable units and as held by learned PCIT. The learned PCIT was very much aware of the judgments of Hon ble Gujarat High Court in assessee s own case for assessment year 2009-10. The learned PCIT impliedly distinguished and differed from the same for arriving at this conclusion based on merit. 7. It was submitted that the contention of learned AR of the assessee before the bench to treat the appeal as covered case on the basis of action of successor of learned PCIT for three subsequent years, wherein the similar proceedings under section 263 on the basis of observation of Directorate of Income Tax (L R) observing that High Court has held that the view taken by assessing officer was plausible view and hence did not upheld the order passed by learned PCIT. The learned DR for the revenue submits the decision of Directorate of Income Tax (L R)) CBT or that successor of PCIT in subsequent years is not binding on the Tribunal. The Tribunal is within its power to examine the issue on merit and adjudicate the appeal. The learned PCIT in the present case has arrived at the conclusion that impugned interest expenditure is not allowable under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsidiary purchased by the petitioner in due course, dividend would be paid and that such dividend would be taxable as income from other sources. He however, harped upon the issue that such investment should be made with the primary motive of earning and that such motive should have direct link with the purpose of earning income. Section 57 3rd of the act allowed deduction while computing income chargeable under the head income from other sources, any other expenditure laid out or expended wholly and exclusively for the purpose of making or earning such income. It was this context the assessing officer had accepted the assessee s contention that if the investment is treated as not having been expended in the assessee is business in USA and therefore, wholly and exclusively for the purpose of business. The same should be treated as one for earning income from other sources. The assessing officer also accepted the assessee s reliance on the decision of the Supreme Court in Rajendra Prasad Moody (supra) in which it was held that deduction under section 57(iii) of the Act, was not conditional upon actually making or earning income. It was a case where interest was paid on monies b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-10, setting aside the order passed under section 263 of IT Act and allowing the petition of the assessee, the 263 proceeding on similar issue, in the instant case are required to be dropped. 10. Thus, keeping in view the aforesaid factual discussion when the show cause notice under section 263 on similar ground for revising the assessment order for assessment year 2009-10 has been set aside by High Court and by accepting the order of High Court similar revision proceedings initiated on similar show cause notice for three subsequent assessment years, has already been dropped by revenue, therefore the issues raised in the present appeal is squarely covered in favour of assessee. The contention of learned DR for the revenue that the decision of Directorate of Income tax (L R), CBDT or Principal CIT is not binding on Tribunal. The contention of learned DR for the revenue is fair that the decisions of Directorate of Income tax (L R), CBDT or Principal CIT is not binding on Tribunal, however, those decision are binding on Principal CIT and learned DR of revenue. Once, the order of High Court on identical issues for assessment year 2009-10 is accepted by higher authorities of rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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