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TMI Blog2021 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... r the A.Y. 2012-13 vide order dated 30.01.2015 under section 143(3) of the Income-tax Act, 1961 (hereinafter 'the Act'). 2. The only issue in this appeal of assessee is against the revision order passed by PCIT under section 263 of the Act setting aside the assessment framed by the Assessing Officer despite the fact that he was unable to satisfy the twin conditions for invocation of revision proceedings under section 263 of the Act but order being erroneous and prejudicial to the interest of the Revenue. For this assessee has raised the following two grounds: - "1. The learned CIT erred in passing an order under section 263 and setting aside the assessment framed by the Assessing Officer, although he was unable to satisfy the twin condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not carried out any enquiry in this regard. Hence, he issued show cause notice for revising the assessment. Hence, the PCIT after considering the submissions of the assessee noted that the assessee has received total interest of Rs.4,06,26,679/- as per 26AS but offered interest only to the tune of Rs.2,23,66,329/-. It was stated that the assessee has claimed expenses of Rs.2,69,372/- under various heads and also diverted the income or application of income in regard to a particular payment to 6 (six) other shareholders. Hence, according to him, it has to be determined whether amount sought to be diverted reach to assessee as his own income or not. He further noted that it has to be verified whether disbursement of income made by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ochem Pharmaceutical industries Limited, ICCI Bank Ltd as "Escrow Agent" and the Purchaser-Cadila Healthcare Limited. As per this Escrow Agreement -escrow account was to be opened with the Escrow Agent in the name of "Mr. Mayank J. Shah (Networking Capital and Indemnity) Escrow Account" for depositing following amounts to be utilized for the purpose of, (a) Net working capital and net debt adjustments and (b) Indemnifying the Sellers from any losses that may be suffered from Pending Actions from Revenue authorities, Sellers' breach of warranties given, Tax Assessments; non-receipt of valued added/sales tax forms, settling any claims made by the Purchasers against the Sellers etc. Whereas the escrow amounts were to be deposited in design ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e". 5. We noted that in response to query raised by the Assessing Officer, the assessee has given the details of Escrow Deposit, the interest earned and the disbursement of interest to Cadila Health Care, his family members and group concern stake holders. The details have been reproduced by the Assessing Officer in the assessment order. The assessee explained to Assessing Officer that all the beneficiaries of the interest incomes have declared the same in their individual returns of income and offered the same for tax. The copies of these returns with computations oft incomes were also furnished by the assessee before the AO as well as before the CIT(A) and even now before us. The Assessing Officer clearly missed out on a simple principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to a rider that - further liabilities relating to the period when the seller owned the company surface In future, the incremental liabilities have to be re-imbursed by the seller. Some estimation is made by the seller and the buyer of this probable incremental liabilities and an amount to the extent of this estimate is placed by the seller in escrow account If any such liability arises in the future, this is discharged from the escrow account and if the liability does not arise, the amount in escrow is reimbursed to the seller. The escrow funds are parked in some income earning investments in the meantime- say in fixed deposits with banks. There will naturally be interest receivable on the investments. As to whom the interest received h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... government treasury. As per law, it is supposed to issue the TDS certificate in the name of the person on the Fixed Deposit receipt. As seen earlier, the FDR was kept in name of Mr. Mayank J Shah. 8. In view of these facts, we are of the view that the AO as well as CIT(A) erred in holding that the entire interest belongs to assessee whereas, the assessee has passed on its share in proportion to the actual beneficiaries. It is only the assessee's family members and group entities who have received the interest through the assessee and passed it to its real owner. 9. The assessee has filed complete details before the AO and AO after going through the details of interest as is mentioned in letter dated 05.10.2016 filed before Pr.CIT, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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