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TMI Blog2024 (4) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee being into real estate project has borrowed funds from SREIIFL for the business purpose and for short term when the funds were idle as a prudent business man and for commercial expediency, the funds were utilized for giving loan to another concern. AO fairly dealt with this issue and on observing that interest expenditure has been claimed in the interest of business has allowed the said claim. Under these given facts and circumstances, we firstly find that the assessment order is not erroneous as a detailed enquiry has been conducted and secondly not prejudicial to the interest of the revenue as the assessee has set off the interest expenditure against the interest income earned from applying the short term loans and advances - Revisionary proceedings u/s 263 quashed - Decided in favour of assessee. - Shri Sanjay Garg, Hon ble Judicial Member And Dr. Manish Borad, Hon ble Accountant Member For the Assessee : Shri Vivek Malhotra, FCA For the Revenue : Shri Arun Bhowmick, JCIT Shri Soumendu Sekhar Das, Sr. D/R ORDER PER BENCH: The present appeal filed at the instance of the assessee is directed against the order of the Learned Principal Commissioner of Income Tax, Guwahat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 8. That on the facts and circumstances of the case and in law, the Principal Commissioner of Income-tax - Guwahati - 1 erred in exercising jurisdiction u/s 263 by setting aside the aforesaid issue even though the same had been discussed and scrutinized by the Assessing Officer in detail while framing the assessment u/s 143(3) of the Act. 9. That on the facts and circumstances of the case and in law, the Principal Commissioner of Income-tax - Guwahati - 1 failed to point out any error in the order of the Assessing Officer in disallowing of interest respective company is core investment company, which is sine qua non for initiation of proceedings u/s 263 of the Act. 10. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal. 3. Through this appeal the assessee has challenged the assumption of jurisdiction u/s 263 of the by ld. Pr. CIT. 4. Facts in brief are that the assessee is a private limited company engaged in the property business. Return of income for Assessment Year 2018-19 furnished on 30/10/2018 declaring total loss of Rs. 7,01,107/-. Case selected for scrutiny followed by validly serving notice u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue. On the other hand, the ld. D/R vehemently argued supporting the order of the ld. Pr. CIT. 7. We have heard the rival contentions and perused the material placed on record. The assessee has raised various grounds challenging the assumption of jurisdiction by ld. Pr. CIT u/s 263 of the Act holding that the assessment order for Assessment Year 2018-19 is erroneous and prejudicial to the interest of the revenue. But the only issue raised in the revisionary proceedings is regarding allowability of interest expenditure of Rs. 1,04,83,749/- paid to SREIIFL. 8. We find that the provisions of Section 263 of the Act has a direct bearing on the issue raised before us, therefore, it is pertinent to take note of this Section which reads as under: 263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income Tax (in short the ld. Pr. CIT ) have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the ld. Pr. CIT was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he forms an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the ld. Pr. CIT was not required the assistance of the assessee. Thereafter the third stage would come. The ld. Pr. CIT would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The ld. Pr. CIT has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest burden started from the date of borrowing the secured loan at that point of time, the commercial project did not pick up but looking at the interest burden, the assessee advanced the funds to M.L. Singhi and Associates Private Limited. Admittedly, the funds were borrowed funds carrying the interest rate of 14.21 % but the funds were advanced to M.L. Singhi Associates were at a lower interest rates at 13.96%. The observation of the ld. Pr. CIT is that funds which were borrowed from SREIIFL has not been utilized for the purpose of business and, therefore, the interest expenditure incurred on the loan from SREIIFL should not be allowed. 9. Now, we are presently dealing with the revisionary proceedings and firstly, we have to examine whether this issue has been examined by the Assessing Officer and a plausible view has been taken. We find that the in the notice issued u/s 142(1) of the Act in the annexure placed at page 19 to 21, specific questions have been raised in point 6 with regard to the investments/loans appearing in the balance sheet and justification regarding interest paid to others amounting to Rs. 1,04,83,709/- has been asked for. The assessee had made detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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