Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (8) TMI 1179 - ITAT MUMBAIRevision u/s 263 - A.O failed to examine the issue of purchase of TDR for ‘Asha Kiran’, even though the records indicate the purchase of TDR by M/s. Kamanwala Construction Ltd., directly from M/s. Eversmile Construction Ltd - Held that:- A.O had issued show cause notices on various dates and called for necessary details in respect of Asha Kiran project and loan and advances. The assessee has a filed paper book containing details filed before the A.O. Assesse has filed copies of MOU between the assessee and M/s. Kamanwala Construction Co. and also agreement for purchase of TDR between M/s. Kamanwala Construction Co. and M/s. Eversmile Construction Co. P. Ltd. wherby we find the assessee had entered into a MOU with M/s. Kamanwala Lakshchandi Todays Developers to facilitate development of project and also to load 100% TDR on the project, for which the assessee was paid consideration of ₹ 4.50 crore. The CIT, without appreciating the facts, observed that the liability was not on the assessee to purchase TDR and came to the conclusion that the A.O has erroneously allowed expenditure on TDR, which is not otherwise allowable to the assessee. Disallowance of interest for diversion of interest bearing funds - Held that:- A.O has examined the issue at the time of 143(3) assessments and also initiated rectification proceedings under section 154 of the Act, for the specific purpose of disallowance of proportionate interest paid on loans for diversion of interest bearing funds to group concerns. However, after satisfied with the explanation given by the assessee dropped 154 proceedings, therefore the CIT was incorrect in observing that there is a lack of enquiry on the part of the A.O in examining the issue of disallowance of interest. We find force in the arguments of the assessee, for the reason that although the audit reports states that the assessee has advanced interest free loans, the assessee categorically proved that the loan is advanced out of commercial expediency in the normal course its business which has been repaid over a period of time. The A.O has followed the ratio in the case of S.A Builders Ltd [2006 (12) TMI 82 - SUPREME COURT] to decide the issue of disallowance of interest which cannot be said to be erroneous and also prejudicial to the interest of the revenue. Therefore, we are of the considered view that the order passed by the A.O is neither erroneous nor prejudicial to the interest of the revenue. In the present case on hand, the order passed the AO is not erroneous, as the AO has examined the issues and also had applied his mind to the issues pointed out by the CIT, which is evident from the fact that the AO has called for necessary details required for completion of assessment. The order passed by the AO is not prejudicial to the interest of the revenue - Decided in favour of assessee.
|