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2016 (9) TMI 1341 - ITAT AHMEDABADRevision u/s 263 - addition under section 40A(2)(b) - exercise of revision jurisdiction even when an assessment is framed without any enquires - Held that:- It is an undisputed fact that the Assessing Officer had framed a regular assessment. He issued section 142(1) notice dated 23.12.2011. Specific query seeking details of the impugned interest expenses raised. This question raised is at sl. no.19. The assessee filed reply thereto placing on record all necessary details for the interest expenditure in question. Page no.35 is annexure-III depicting comparative chart of the two payees. DR raises a very strong objection that the assessee has not deliberately placed on record Annexures-I & II filed before the CIT. We put up a special query as to whether there is any attempt to mislead the bench or contents of the relevant paper book are not correct. The reply received is in negative. The Revenue’s objection is accordingly overruled. We proceed further to notice that the assessee had acquired the sum in question of ₹ 5 crores in lieu of reserving 50000 sq. mtr. plot in its project submitted in correspondence with the payee dated 04.08.2008. It accepted MPSEZ’s booking withdrawal on 01.04.2009 sought vide letter dated 17.03.2009 with interest stipulation @ 18% till actual payment. Assessee’s ledger maintained disclosing payment of ₹ 5 crores and interest in question made between 18.02.2010 to 26.03.2010. All this followed the regular assessment dated 28.05.2012 not making any interest disallowance. These facts indicates that the Assessing Officer had made all due enquiries, examined the interest issue in question and find it a fit case for not invoking section 40A(2)(b) of the Act. At this stage relies upon section 263 Explanation 2 inserted in the Act by the Finance Act 2015 w.e.f. 01.06.2015 envisaging exercise of revision jurisdiction even when an assessment is framed without any enquires and verification which should have been, in the opinion of revisional authority, deemed to be erroneous in so far as prejudicial to the interest of the revenue. Next argument of the assessee is that it is payee M/s MPSEZ has already been assessed at maximum marginal rate. It quotes board’s circular dated 06.07.1968 clarifying that an interest expenditure is not to be disallowed in case there is no tax saving at payee’s behalf. Learned authorised representative places on record M/s MPSEZ’s return filed for the impugned assessment year itself stating net total income of ₹ 1,27,39,970/- i.e. taxable at maximum rate. There is no rebuttal coming at Revenue’s instance. Assessee’s third argument is that its interest outgo of 18% & 10% in question is very much distinguishable. We have already indicated in preceding paragraphs that assessee had incurred 10% interest qua a claim raised under section 36(1)(ii) of the Act in respect of capital borrowed as against that @ 18% in question arising from retention of booking advances of ₹ 5 crores. These two interest sums stand on different footings. We find that hon’ble jurisdictional high court in case of CIT vs. Sarjan Realties Limited (2014 (8) TMI 206 - GUJARAT HIGH COURT) is of the view that section 40A(2)(b) disallowance does not arise because of the mere fact that an assessee has paid different interest rate to different payees thereby comparing the same in order to hold the higher outgo as excessive. There is no issue that the CITs finding in question take into account assessee’s interest expenses difference i.e. 18% and 10% (supra) for directing AO to frame a fresh assessment. These two interest sums arise in totally different backgrounds not having any similarity. We are further of the opinion that the CIT has erred in directing the Assessing Officer to frame a fresh assessment in these peculiar facts and circumstances. We accept assessee’s arguments to reverse the CIT’s order under challenge in view of our discussions hereinabove. No other point was argued in the course of hearing except those specifically dealt in our instant adjudication. Assessee’s appeal is allowed
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