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2022 (9) TMI 1556 - HC - Income TaxRevision u/s 263 quashed by ITAT - netting off of interest expense with interest income - distinction between “lack of enquiry” and “inadequate enquiry” - Whether ITAT was correct in holding that the view taken by AO was not unsustainable in law, when, in fact, excess relief in contravention to Section 80IA involving the meaning of “Profit derived from business” was erroneously allowed by the Assessing Officer, causing prejudice to the Revenue? - HELD THAT:- After having appraised itself about the legal position, more particularly the decision of Malabar Industries Ltd. v[2000 (2) TMI 10 - SUPREME COURT] the tribunal took note of the contention of the assessee that the overdraft facility has been granted on the security of the fixed deposit and, therefore, the interest on the overdraft and the interest on the fixed deposits are inter-linked. Assessee has used its fixed deposits for taking overdraft facilities without encashing the fixed deposits and the interest on the overdraft has a direct nexus with interest accruing in the fixed deposit and, therefore, the interest on the overdraft has been adjusted with the fixed deposit interest and the net interest income has been shown as other income. Tribunal has noted that the assessing officer had enquired into this aspect and had taken one of the plausible view of netting off of interest expense with interest income, in the light of the decision of ACG Associated Capsules (P) ltd. [2012 (2) TMI 101 - SUPREME COURT]. Tribunal after going through the entire records placed before it has recorded a finding that the assessing officer, after making proper enquiry and proper application of mind has framed the assessment under Section 143(3) of the Act and, therefore, the assessment order cannot be termed to be ‘erroneous’ and ‘prejudicial to the interest of revenue.’ The tribunal also noted the settled distinction between “lack of enquiry” and “inadequate enquiry” and if it is a case of an inadequate enquiry, the law is settled that an order u/s 263 cannot be passed. Tribunal on analysing the factual position has granted relief to the assessee. Thus, no substantial question of law arises.
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