TMI Blog2014 (7) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the liability to repay the amounts of advance and interest and also rate of interest on which, advance should be repaid - the question of bringing to tax interest on different amounts as directed by the CIT does not arise - when the very basis of levy is subject matter of appeal, the CIT could not have invoke the jurisdiction u/s 263 in opining that higher amount should have been considered for levy of interest - there is no basis for CIT invoking jurisdiction u/s 263 - thus, the order of the CIT is set aside – Decided in favour of Assessee. - ITA.No.752/Hyd/2013 - - - Dated:- 9-7-2014 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Mr. K. C. Devdas For the Respondent : Mr. M. Jagdish Babu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, since the amount of ₹ 22,00,00,000/- was outstanding, assessee filed suit for recovery at 18% and accordingly, A.O. had already considered the amount for bringing to tax interest on accrual basis. Assessee objected to the proceedings under section 263. However, CIT(C) vide his para 3 extracted the amounts advanced and opined in para 4 that A.O. should have considered the above amount of ₹ 30,00,00,000/- for the purpose of calculation and charging of interest. He came to the conclusion that interest has been under-assessed. Accordingly, he set aside the assessment order with a direction to re-compute the income of the assessee company after making necessary verification of the issue. 3. Questioning the above order of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of interest. Therefore, it cannot be presumed that the interest accrued to the assessee at the rate of 18% p.a. as claimed by the assessees in the suits filed for recovery of advances. The Civil Courts would consider and decide the liability of M/s. SCSL to repay the amounts of advances and would also consider the liability of M/s. SCSL to pay interest thereon and the rate of interest at which the advances should be repaid. Therefore, unless and until the liability to pay the advances and the rate of interest at which the temporary advances are to be repaid is determined by the Civil Court, it cannot be said that the same has accrued or arisen to the assessees. However, if the assessees had advanced interest bearing funds as interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the A.O. 7. We have considered the issue, examined the documents and orders on record. There is no dispute with reference to the fact that assessee has advanced funds to the said Satyam Computers Services Ltd., however, the dispute is with reference to levy of interest on the amount advanced. Assessee has not advanced the funds on interest basis and subsequently, it claimed recovery of principal amount with interest at 18% by filing a suit in City Civil Court, Hyderabad. This is the basis for A.O. to make an addition on notional basis. This matter was already considered and decided in favour of the assessee by the ITAT in the above referred case with a direction that the amount of interest can be brought to tax in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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