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TMI Blog2022 (8) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... t of disallowance u/s 36(1)(iii) on the loans and advances made to the sister concern, it is an admitted position that the question of disallowance u/s 36(1)(iii) is not subject matter of revision, but the rate to be adopted for the purpose of computing the amount of disallowance u/s 36(1)(iii). During the course of assessment proceedings, the appellant had categorically stated that the average rate of interest is only 14% as the appellant had borrowed the funds at the rate of interest ranging from 8% to 20%. The appellant had also filed the details such as name of the lenders and rate of interest etc. Therefore, it cannot be said that the Assessing Officer had adopted rate of interest @ 14% without making any enquiry as to the average rate of interest at which the loans were borrowed by the appellant company. As things stand today, the question of disallowance u/s 36(iii) does not arise for the reason that the addition made by the Assessing Officer came to be deleted by the CIT(A) on appeal. Therefore, the issue as to what is the correct rate of interest to be adopted had become academic. In the circumstances, the order of revision passed by the ld. PCIT cannot be sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. PCIT also found that the Assessing Officer had not considered the item appears under head loans and advances towards land as the interest bearing funds were utilized for non-business purposes. Based on this observation, the ld. PCIT formed an opinion that the assessment order passed by the Assessing Officer u/s 143(3) dated 29.12.2017 is erroneous and prejudicial to the interests of the Revenue and, accordingly, proposed to revise the assessment order by issuing the show-cause notice u/s 263 on 11.09.2018. In response to show-cause notice, the appellant filed a detailed explanation vide letter dated 16.12.2017 stating that during the course of assessment proceedings, the appellant had furnished the complete details of advances for properties of Rs.58,98,18,075/- and also demonstrated that these advances were made for the business purposes. The Assessing Officer having examined the complete details submitted by the appellant had chosen not to make any addition, as Assessing Officer was satisfied that when the advances are made for the business purposes, the question of disallowance u/s 36(1)(iii) does not arise. 4. As regards to the rate of interest to be applied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties were furnished by the appellant vide letter dated 16.12.2017 received in his office on 21.12.2017 which are placed at page no.70 to 72 of the Paper Book, wherein it was clearly mentioned that the advances were made for the purchase of properties as per the details furnished therein. Having considered this fact, the Assessing Officer had chosen not to make any addition. As regards, the disallowance of interest u/s 36(1)(iii) in respect of loans and advances made to sister concerns, it was submitted that out of total interest debited to the P L Account of Rs.46 crores, an amount of Rs.8 crores disallowed by the Assessing Officer himself, under the provisions of section 14A of the Act. The Assessing Officer made a disallowance of interest u/s 36(1)(iii) on the ground that the interest bearing funds were diverted for nonbusiness purposes, made a disallowance of Rs.38 crores by adopting 14% rate of interest on the loans and advances of Rs.231,40,88,373/- vide order dated 22.01.2018 passed u/s 154 of the Act. He further submitted that the issue of disallowance of interest u/s 36(1)(iii) is subject matter of appeal before the ld. CIT(A), who vide order dated 30.03.2022 had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case in order to ascertain whether or not the Assessing Officer had conducted proper enquiries with regard to the items sought to be revised by the ld. PCIT. As regards to the advance of the properties, it is an admitted position that during the course of assessment proceedings, the appellant had furnished details of advances for properties of Rs.58,98,18,075/-. No doubt the assessment order is silent as to the fact that the Assessing Officer had verified this item i.e. advances for properties. Nevertheless, there is nothing on record triggering enquiry into this item or to substantiate that this transaction is something else and nor the ld. PCIT had referred to any material on record justifying the revision. There is no gainsaying that the power of revision can be exercised by the ld. PCIT based on the opinion formed by himself. The revision based on the subjective opinion of the ld. PCIT cannot be sustained in the eyes of law. As observed by us, there was no existence of facts and circumstances on the base of which the ld. PCIT had formed an opinion that an enquiry is warranted into the item appearing under the head Advance for properties . In the circumstances, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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