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2023 (3) TMI 350 - ITAT KOLKATARevision u/s 263 by CIT - reporting of correct income of interest received from bank vis-a-vis. as appearing in Form 26AS - Finance cost paid by the assessee to bank on various credit facilities vis-a-vis. the quantum of borrowings - HELD THAT:- On the first issue relating to high borrowing cost vis-a-vis. the amount of borrowed money, admittedly, it is a fact on record that assessee has made detailed disclosure of its finance cost during the year under consideration by way of Note No. 24 forming part of the financial statement for the year. We note that this finance cost of Rs. 3.92 Cr. has two components, (a) interest expenses of Rs. 98.94 Cr. (b) bank charges and commission for Rs. 2.94 Cr. The component of bank charges and commission are all in respect of buyers' credit, availed by the assessee against the issue of LCs for its import purchase. The import purchase outstanding as on 31.03.2017 are reported as sundry creditors/trade payables which forms part of current liabilities and not the borrowed money. We also take note of the fact that assessee has furnished all the details in respect of expenses incurred by it on letter of credits against its import purchase, which the Ld. Pr. CIT has failed to consider and examine or caused to have examined them before arriving at the conclusion to pass the impugned revisionary order. The long term and short term borrowings outstanding at the end of the year as reported in the audited financial statements at Rs. 2.90 Cr. and the trade payables are at Rs. 40.45 Cr. Against these two components, the total finance cost claimed by the assessee is of Rs. 3.92 Cr. All these facts are verifiable from the material placed on record. In respect of second issue relating to reporting of interest income by the assessee wherein the bank itself has done the netting of interest income against the interest expenses though the assessee has reported the interest income of Rs. 1,12,15,593/-. There is no under assessment of the interest income as observed by the assessee since interest income earned has been reconciled with Form 26AS. Thus we find that PCIT has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s. 263 - in the course of proceedings u/s. 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice issued by the Ld. PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee placed on record. Examination and verification of the audited financial statement i.e. Balance sheet and P & L Account of the assessee. Perusal of the ledger account and the details of imports made by the assessee tabulated in the paper book, reveals the correct state of affairs in respect of the two issues raised in the impugned revisionary proceeding for which, both the Ld. Pr. CIT and the Ld. CIT, DR could not bring any material to controvert the said verifiable factual position. Accordingly, on the two issues raised by the Ld. Pr. CIT in the revisionary proceeding, no action u/s. 263 of the Act is justifiable - Decided in favour of assessee.
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