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TMI Blog2021 (8) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of the assessment proceedings had duly verified the assessee s claim for deduction of the interest expenditure, we are unable to persuade ourselves to accept the same. As is discernible from the reply dated 04.02.2017 filed by the assessee in compliance to the queries that were raised by the A.O u/s 142(1), dated. 29.01.2017, we find, that the assessee had therein only furnished the bifurcated details of the interest expenditure with reference to the banks/financial institutions from whom the same were raised. We are of a strong conviction that no infirmity emanates from the order passed by the Pr.CIT, who had rightly observed that the A.O without verifying the assessee s claim for deduction of interest expenditure had summarily accepted the same on the very face of it. Our aforesaid conviction is fortified by the Explanation 2(a) to Sec. 263 of the Act, as per which, where an order is passed by an A.O without making an inquiry and verification which in the opinion of Principal Commissioner or Commissioner should have been made, the order therein passed by him shall be deemed to be erroneous in so far it is prejudicial to the interest of the revenue. We, thus, are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was accepted as such. 3. After culmination of the assessment proceedings, the Pr.CIT in exercise of the powers vested with him u/s 263 of the Act called for the assessment records of the assessee. On a perusal of the records, it was observed by the Pr.CIT that the assessee had claimed deduction of interest expenditure of ₹ 79,67,173/- that was stated to have been paid in respect of property loan. On a perusal of the depreciation chart of fixed assets, it was observed by the Pr. CIT that the assessee had during the year under consideration purchased two flats, viz. (i). flat purchased for a consideration of ₹ 41,46,083/- on which the assessee had claimed depreciation @10%; and (ii). flat purchased for a consideration of ₹ 8,56,85,000/- on which no depreciation was claimed. Backed by the aforesaid facts, the Pr.CIT formed a view that though the flat on which the assessee had claimed depreciation was a business asset , however, the other flat on which no depreciation was claimed would not have been used by the assessee for his business purpose during the year under consideration. Further, it was observed by the Pr.CIT that from a perusal of the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration. As regards the query pertaining to the claim for deduction of interest expenditure of ₹ 79,67,173/- in his profit and loss account, the bifurcated details as regards the same were furnished by the assessee with the Pr. CIT, which read as under: Sr. No. Name of the Financial Institute Nature of loan Interest paid on loan Documents attached in support of claim Loan taken and interest allowed since 1. Tamilnadu Mercantile Bank Office at South Mumbai 12,77,175/- Loan Passbook April 2014 2. Tamilnadu Mercantile Bank Office at Delhi 38,52,846/- Loan passbook August 2012 3. Tamilnadu Mercantile Bank Office at Chembur 5,72,848/- Loan Passbook March 2011 4. India Bulls Loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim for deduction of interest expenditure of ₹ 79,67,173/- that was debited in his profit and loss account , without carrying out any proper verification. It was observed by the Pr.CIT that the assessee had himself admitted before him that out of the total interest expenditure of ₹ 79,67,172/- an amount of ₹ 10,91,073/- and ₹ 11,73,230/- pertained to Office No. 1702 and Office No. 1001, respectively, which were purchased by him vide agreements that were registered on 13.10.2014 and 25.11.2014. It was observed by the Pr.CIT, that the assessee had neither furnished any documentary evidence which would reveal that the aforementioned properties were put to use during the year under consideration nor filed the copies of the aforesaid registered agreements. Backed by the aforesaid facts, the Pr.CIT observed that no material was placed on record by the assessee which would reveal that he had received possession of the aforementioned properties during the year under consideration. Adverting to the assessee s claim for deduction of the balance amount of interest expenditure of ₹ 57,02,869/- [i.e ₹ 79,67,172/-(-) ₹ 10,91,073/- (-) ₹ 11,73,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017 that was filed by the assessee in compliance to the aforesaid notice u/s 142(1), dated 290.01.2017. It was submitted by the ld. A.R that the assessee at Serial no.9 of his reply had furnished the bifurcated details as regards his claim for deduction of interest expenditure of ₹ 83,61,643/- pertaining to the various loans that were raised from the banks/financial institutions. Backed by the aforesaid facts, it was the claim of the ld. A.R, that now when the A.O in the course of the assessment proceedings had carried out necessary verifications qua the assessee s claim for deduction of interest expenditure, therefore, the Pr.CIT was clearly divested of his jurisdiction to revise the assessment order on the said count in exercise of the powers that were vested with him u/s 263 of the Act. In support of his aforesaid claim the ld. A.R had relied on the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Gabriel India Limited (1997) 203 ITR 108 (Bom). It was submitted by the ld. A.R that as observed by the Hon ble High Court of Bombay, the CIT cannot seek revision of an order merely because he disagrees with the conclusion arrived at by the A.O. Our attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im u/s 263 of the Act. It was, thus, submitted by the ld. A.R that as the Pr.CIT in the present case had exceeded his jurisdiction u/s 263 of the Act, therefore, the order passed by him was liable to be vacated. Alternatively, it was submitted by the ld. A.R that as the Pr.CIT had not afforded sufficient opportunity of being heard to the assessee in the course of the proceedings u/s 263 of the Act, therefore, for the said reason the requisite details could not be filed before him. 7. Per contra, the ld. Departmental Representative (for short D.R ) relied on the order passed by the Pr.CIT u/s 263 of the Act, dated 18.03.2020. It was submitted by the ld. D.R that as the A.O had blatantly failed to conduct any enquiry vis-a-vis the issue in question i.e the assessee s claim for deduction of interest expenditure and had summarily allowed the same without carrying out any verification at all, therefore, the Pr.CIT had rightly invoked his jurisdiction u/s 263 of the Act and set-aside the assessment with a direction to the A.O to pass a fresh order after affording a reasonable opportunity of being heard to the assessee. In order to fortify his aforesaid averment that the A.O ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest aggregating to ₹ 79,67,173/- that was claimed to have been paid in respect of the various loans/borrowings taken from banks/financial institutions vis-a-vis the purchase/acquisition of his various office premises. On a perusal of the aforesaid details, we find that out of the total interest expenditure of ₹ 79,67,173/- (supra) only an amount of interest expenditure of ₹ 22,63,303/- pertains to the aforementioned office premises i.e Office Nos. 1001 and 1702 at Brindavan Terrace, Mumbai, the purchase/acquisition of which, as stated by the assessee, was partly sourced from the loans/borrowings that were raised by him from two financial institutions, viz. (i). loan from DHFL (for purchase of office no. 1702) : ₹ 3,00,00,000/-; and (ii) loan from India Bulls (for purchase of office No. 1001) : ₹ 2,59,50,000/-. In the backdrop of the facts furnished by the assessee in the course of the revisional proceedings, we find, that as observed by the Pr.CIT, and rightly so, the assessee had not only in the course of the assessment proceedings but also in the course of the proceedings before him not furnished any documentary evidence which would reveal that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at South Mumbai, Delhi and Chembur in the earlier years. As regards the claim of the ld A.R that the A.O in the course of the assessment proceedings had duly verified the assessee s claim for deduction of the interest expenditure, we are unable to persuade ourselves to accept the same. As is discernible from the reply dated 04.02.2017 filed by the assessee in compliance to the queries that were raised by the A.O u/s 142(1), dated. 29.01.2017, we find, that the assessee had therein only furnished the bifurcated details of the interest expenditure with reference to the banks/financial institutions from whom the same were raised. Accordingly, in the backdrop of our aforesaid deliberations, we are of a strong conviction that no infirmity emanates from the order passed by the Pr.CIT, who had rightly observed that the A.O without verifying the assessee s claim for deduction of interest expenditure had summarily accepted the same on the very face of it. Our aforesaid conviction is fortified by the Explanation 2(a) to Sec. 263 of the Act, as per which, where an order is passed by an A.O without making an inquiry and verification which in the opinion of Principal Commissioner or Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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