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2015 (6) TMI 315 - AT - Income TaxRevision u/s 263 - the interest income to the tune of ₹ 77,40,000/- has not been offered to tax - Held that- What started with a proposed revision of assessment order on the ground that "interest income to the tune of ₹ 77,40,000 has not been offered to tax" ended with a discretion to the assessing officer to examine the diversion of interest bearing funds towards investments which are not yielding any income as "the assessee directly or conclusively could not prove that he has not diverted interest bearing borrowings towards investments which are not income yielding". As to whether such a shift in the stand of the CIT, while exercising powers under section 263, we find guidance from a co-ordinate bench's decision in the case of Synergy Entrepreneur Solutions Pvt Ltd vs DCIT [2011 (3) TMI 52 - ITAT MUMBAI] to conclude that itt is thus clear that there has been shift in the stand of the CIT on whether it was a fit case for revision on the ground that the assessee was not eligible for set off of losses on speculative transactions or whether it was a case for revision on the ground that the AO did not make necessary verifications about the transactions. The reason given in the show-cause notice is former, while the reason for which revision powers are finally exercised in the impugned order are latter. Even on merits there is nothing on record to show that the assessee was under any obligation to charge interest @12% on the aforesaid advance. On the contrary, learned CIT has himself treated this advance as an investment which did not yield any income. As learned counsel points out that there is a mention about 12% interest p.a. in respect of firm's transactions with the partners and such a provision has no bearing on transactions between the partners inter se. Learned DR could not point out anything which even indicates charging of interest on such loans. The very foundation of the impugned revision proceedings was devoid of legally sustainable basis. As regards the question of disallowance of interest, we have noted that the assessee's uncontroverted stand is that no deduction has been claimed for any interest payment. When there is no claim for deduction, there is the question of disallowance of such deduction. - Decided in favour of assessee.
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