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2021 (5) TMI 346 - AT - Income TaxValidity of revision jurisdiction u/s. 263 - CIT directing the ld. AO to disallow the interest paid on borrowed funds u/s.36(1)(iii) - HELD THAT:- AO had made adequate enquiries in the original assessment proceedings itself with regard to the issue of interest on borrowed funds and respectfully following the aforesaid decision, we hold that the said assessment completed after due enquiries, cannot be the subject matter of revision proceedings u/s 263 of the Act by the ld PCIT. No hesitation in holding that revision order passed by the ld. PCIT u/s 263 of the Act deserves to be quashed and is hereby quashed on this count itself. It is not in dispute that the borrowings and interest free advances to IHCL were made in earlier years and not during the year under consideration. In earlier orders we find that the borrowings made by the assessee and its utilisation thereof by way of interest free advance to IHCL has been accepted by the Revenue in scrutiny assessment proceedings, as meant for business purposes. PCIT invoked revision jurisdiction u/s.263 of the Act for A.Y.2013-14 but did not initiate any action with reference to this issue of disallowance of interest u/s.36(1)(iii) of the Act though the borrowings and utilisation thereon by way of interest free advance to IHCL were made prior to A.Y.2013-14. All these assessment orders and order of ld. PCIT u/s.263 of the Act were indeed available before the ld. AO while framing the assessment for A.Y.2015-16 which drives home the principle of consistency as well as the stand taken by the department in assessee’s own case for various years. While this is so, the ld. AO taking a consistent view thereof in A.Y.2015-16 i.e. the year under consideration, cannot be categorised as passing erroneous order. On the contrary the ld. PCIT has passed an erroneous order in the instant case. Hence, revision jurisdiction u/s.263 of the Act invoked by the ld. PCIT deserves to be quashed even on this count both on technicality as well as on merits. Since, we have already held that sufficient enquiries were indeed carried out by the ld. AO in the course of original assessment proceedings, the reliance placed by the ld. PCIT on the provisions of Explanation-2 to Section 263 of the Act would not be relevant at all for the purpose of adjudication. Accordingly, the grounds raised by the assessee are allowed.
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