9911796707
TMI Blog2021 (2) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore the order now passed u/s 263 is unwarranted, invalid and badin- law. It is prayed that the proceedings and the subsequent order passed u/s 263, which is merely an extension of an assessment order which was void ab initio may very kindly be quashed. 2.The appellant craves leave to add any new ground of appeal or alter, amend or delete any of the above grounds of appeal. 3. Brief facts of the case as culled out from the records are that the assessee is the proprietor of Shiv Shakti Industries which is engaged in the business of manufacturing of fuel oil. Apart from it, he has derived income from house property, capital gain and other sources during the year. The assessee filed e-return on 04.l1.2014 declaring total income of Rs. 11,97,260/- apart from agricultural income of Rs. 89,500/-. This return was selected for limited scrutiny through CASS and notice u/s 143(2) of the Income-tax Act, 1961 dated 18.09.2015 was issued. In spite of a limited scrutiny assessment the Ld. AO issued a 21 point questionnaire on 27.04.2016 and another query letter dated 27.05.2016. The reason for scrutiny was "Large interest expenses relatable to exempt income u/s 14A". The assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the show cause notice u/s 263 is reproduced as under:- 4.1 On perusal of the case record for the AY 2014-15 it is found that you have claimed huge interest expenses against the business income whereas a large part of fund was locked in assets such as agriculture land and shares income from which was claimed as exempt. However, the AO without doing independent verification at his end, accepted the calculation submitted by your side for making disallowance u/s 14A. 4.2 While calculating the average value of investment while making calculation (As per section 14A read with Rule 8D, you have deducted average value of the capital, thereby reducing the amount of disallowance to be done u/s 14A. Then, there are investments in assets, which are personal in nature and accordingly have no business expediency for claiming interest. 4.3 11 is also noticed that you had not submitted any details as regard unsecured loan o] Rs. J 3,82, J 79/. shown as paid in the books of Shivshakti stated exclusively for business. 4.4 Given the above, the AO has not made proper enquiry and investigation in to the issue of disallowance to be made u/s 14A. 10. In the above stated show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking inquires or verification which should have been made;' . (b) the order is passed allowing any reliefwithout inquiring into the claim; Please note that it is evident from our submission dated 2510212019 that the Ld. A.O. has passed the order and allowed the relief only after duly making inquiries and verification which should have been made and according to aforesaid explanation the order so passed could not be deemed to be erroneous within the meaning of sec. 263 and therefore provisions of section 263 could not be invoked. 8.As regards non acceptability of the decision of honourable High Court of Delhi given in case of CIT vs. DD Industries Ltd. (2015) 92 CCH 0125 as the said high Court is not the jurisdictional court. we submit that the afore said decision has duly been affirmed by the honourable Supreme Court of India in case of Godrej & Boyce Manufacturing Co. Ltd. vs DCIT in civil appeal no. 7020 of 2011 order passed on May 8, 2017 (Annex 2-13) and accordingly the "Calculation of amount of expenditure in relation to income not includible in total income (Revised)" as submitted by the assessee need not required to be recalculated. 9.As regards explanation reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the Assessing Officer is unsustainable in law. " 12. `Hon'ble High Court in the case of CIT V/s Vikas Polymers 263 ITR 475 (Del) held that "If a query is raised during the course of scrutiny by the AO, which was answered to the satisfaction of the AO, but neither the query nor the answer was reflected in the assessment order, this would not by itself lead to the conclusion that the order of the AO called for interference and revision". 13. Similar view was also taken by Hon'ble Rajasthan High Court in the case of CIT Vs. Ganpat Rai Bishnoi 296 ITR 292 (Raj) holding that "Once enquiry in fact has been conducted and the AO has reached a particular conclusion, though reference to such enquiries has not been made in the order of the assessment, the invocation of jurisdiction by CIT is not sustainable and same is liable to be set aside". 14. This Tribunal in the case of Narottam Mishra (2015) 25 ITJ 206 held that :- "Even this is not the case of the Ld. CIT that certain evidences were overlooked which were very much on record or in the knowledge of the AO. Even this is not the case of Ld. CIT that certain new facts or evidences were brought to the notice of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015)44 CCH 0502 Chd Trib ii. any interest and/or expenditure must have been incurred for investments, income received from which had been claimed exempt. * BRIGADE ENTERPRISES LTD vs. ACIT (2015) 44 CCH 0313 Bang Trib * CIT vs. NAIDUNIA NEWS & NETWORKING(P)LTD (2012) 82 CCH 0320 MPHC iii. there must have received any income and the same must have been claimed exempt: * CIT-V vs. HOLCIM INDIA P. LTD (2014) 90 CCH 0081 Del HC * HEMA ENGINEERING INDUSTRIES LTD vs. ACIT (2015) 45 CCH 0140 Del Trib * CIT vs. I.P. SUPPORT SERVICES INDIA(P) ltd (2015) 94 CCH 0037 Del HC iv. investment made must have been intended to earn exempt income and the same should have not been strategic investment. * RAPID DIAGNOSTIC PVT. LTD vs. ITO (2014) 40 CCH 0597 Del Trib * ACIT vs. BHARAT HOTELS LTD (2014) 42 CCH 0074 Del Trib v. The value of the investments must exceed the own funds as the own funds are suppose to be utilised first for investment. * CIT vs. DD INSUSTRIES LTD (2015) 92 CCH 0125 Del HC In the present case the above conditions are generally not present as the assessee has (i) Not borrowed any fund at the time of making investments and these were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing disallowance of Interest: The investments have been categorised into personal assets (i.e. Rs. 50,26,502/-), Investment Assets (i.e. Rs. 1,28,65,119/-) and rest of the assets are business assets. The assessee has maintained all its personal assets in its books of accounts which could have been debited to capital account of the assessee in the year of purchase. And accordingly for the purpose of all calculations hereinafter we have recalculated the capital employed and total assets. In view of the investment in the personal assets as it has been made out of capital no disallowance is warranted. 19. In the very same letter dated 25.7.2016 question No.11 related to disallowance u/s 14A of the Act seeking following information from the assessee:- Please, justify in the 'light of assets shown 10 the balance sheet- Fixed assets Rs. 1,87,16.897/-, Long Term Investment in Properties Rs. 2,02,05,807/-, Closing Stock Rs. 26.74.427/-, Sundry Debtors Rs.. 4,84,346/-. Deposit Loans and Advances Rs. 2,31,866/-Cash in hand Rs, 4.90,496/-, Loans and' Advances Rs. 25,72,952/~, Miss. Expenses Rs. 1,86,366/- and' Other Current assets Rs. 4,51,005/- all totalling to Rs, 4;71,02,750 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
