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2012 (9) TMI 219 - AT - Income TaxValidity of the order passed u/s 263 by the CIT - Held that:- Going through the order of the CIT as well as the assessment order it can be found that the AO has not dealt with specific issues raised by the CIT in his order passed u/s 263. It is also seen from records that the CIT has passed his order after giving due opportunity of hearing to the assessee. We therefore do not find any infirmity in invoking jurisdiction u/s 263 by the CIT - against assessee Computation of the windmill income - interest paid on loan is to be deducted from the income of power generation while computing deduction u/s 80IA - Held that:- The assessee was sanctioned term loan on 20-5- 2004 and disbursement of the loan started from September, 2004. It is also seen that by the time the loan was taken the assessee has started generating income from windmill, thus it is necessary to find out whether the loan was taken for the windmill project. Since the CIT has not brought any material on record which could suggest that the concerned loan was taken for windmill project it is proper to set aside the order of the CIT and direct the AO to examine the end utilisation of loan amount - in favour of assessee for statistical purposes. Direction for applicability of section 40a (ia) - Held that:- If any amount remains payable on the date of balance sheet on which tax was not deducted at source only that amount can be disallowed by invoking provisions contained u/s 40a (ia)- direct the AO to examine the facts and find out whether the amount has been paid within the relevant previous year or remains payable on the date of balance-sheet - in favour of assessee for statistical purposes. Direction for applicability of section 40A (2)(b) with regard to purchase of film - Held that:- As seen from the order of the CIT that he has only directed the AO to examine the applicability of section 40A (2)(b) and reasonableness involved in payment of consideration with regard to purchase of film . Since the AO has not examined this issue which is very much relevant for the assessment, the CIT set aside the assessment. Since the CIT has not directed the AO to disallow payment made by applying the provisions of section 409A (2)(b) and has only directed to examine the issue, the assessee can raise the contentions before the AO with regard to applicability of section 40A (2)(b) and also reasonableness of the payment made - against assessee.
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