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2017 (2) TMI 1440 - ITAT CHENNAIRevision u/s 263 - disallowance on account of diversion of interest bearing funds to group concerns - HELD THAT:- Admittedly the interest paid by the assessee on borrowings used for the purpose of the business to be allowed as deduction while computing the income of assessee. The interest received by the assessee cannot be set off against the interest paid by the assessee. The interest paid and claimed as a deduction in the computation of profits and gains of the business, cannot be set off against interest received under the head “income from other sources”. So that while computing the disallowance of interest on money advanced to group concern, the gross interest to be considered and proportionate interest disallowance to be worked out, being so, the CIT justified in giving the direction to the AO accordingly. Before us, ld.A.R submitted that interest disallowance by the Ld. CIT was a subject matter of the appeal. In this connection, it is to be noted that the entire assessment order cannot be said to have merged with appellate order. In view of Explanation-C to Sec.263(1) of the Act whereas the assessee had preferred an appeal only on certain points; CIT can revise the assessment order on the other points. The reliance was placed on the judgements of CIT Vs. Farida Prime Tannery in [1998 (4) TMI 26 - MADRAS HIGH COURT] and Seshasayee Paper And Boards Limited [1998 (3) TMI 78 - MADRAS HIGH COURT] and in the case of Soft Beverages P. Ltd. [2000 (12) TMI 80 - MADRAS HIGH COURT] . Hence, in our opinion, the concept of merger with the appellate order cannot be applied; therefore, Ld. CIT is well within his power in exercising revisional jurisdiction on this issue. This ground of assessee is rejected. Disallowance of claim of deduction towards electricity and power generation tax u/s.43B - HELD THAT:- On this issue, in our opinion, electrical tax and power generation tax is statutory liability which requires to be paid before the due date of filing of return of income and as such provisions of the section 43B is applicable and the Ld. CIT is justified in invoking the jurisdiction u/s.263 of the Act to disallow the same. Hence, this ground stands rejected. Claim of deduction u/s.35(2AB) - HELD THAT:- CIT has not withdrawn the claim of assessee u/s.35(2AB) of the Act. He has only remitted the issue back to the file of AO to examine the issue in accordance with law after providing an opportunity to the assessee. Since the AO allowed the deduction without examining the issue in proper sense and he has not made any enquiry on this issue, the order of the AO is very cryptic and is bad in law as the AO what is required to be looked into was not gone through by him. Hence, it makes the assessment order erroneous and prejudicial to the interest of the Revenue. Being so, the CIT is justified in invoking the provisions of the section 263 Corporate Debt Restructuring Mechanism - HELD THAT:- On account of upward revision of interest, the total liability came down by an amount of ₹ 4413.09 lakhs over the period of borrowals. For the assessment year under consideration, there was a deduction of interest to the tune of ₹ 1567.60 lakhs. The interest liability claimed and allowed in the assessment years during the period of borrowings, therefore, the interest reverse in the assessment year under consideration to be considered as income of assessee. However, the AO not considering the issue in proper perspective, hence, the CIT remitted the issue to the file of ld. Assessing Officer to examine the issue afresh after giving an opportunity to the assessee to produce the necessary details before the AO.
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