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2022 (8) TMI 442 - AT - Income TaxRevision u/s 263 - Commissioner of Income-tax jurisdiction in invoking powers u/s 263 - Assessing authority has adopted the profit as per the profit and loss account without excluding the depreciation already debited in the profit and loss account under the provisions of the Companies Act - deductions for depreciation allowance twice, one computed under the Companies Act and the other computed under the Income-tax Act - HELD THAT:- As feared by the assessee, the Commissioner of Income-tax has not dealt with any issue that was subject matter of adjudication before the Tribunal. In that way the Commissioner of Income-tax has not exceeded his jurisdiction available to him under section 263 of the Act. Section 263 authorises a Commissioner of Income-tax to revise any order passed by any subordinate authority, which is found to be erroneous and prejudicial to the interests of the Revenue. The order passed by the assessing authority to give effect to the orders of the Tribunal is "any order" passed by an assessing authority, who is subordinate to the Commissioner of Income-tax. Therefore the Commissioner of Income-tax invoked the powers under section 263 within the permissible limits of Jaw. He has not exceeded jurisdiction. Assessing authority has adopted the net profit for further giving deduction by way of depreciation, which was already modified by the depreciation allowance as provided under the Companies Act. Therefore, the excess amount of depreciation allowance has been granted to the assessee. Likewise, the division of depreciation allowance also has not been done while computing the benefit available to the assessee under section 10B of the Act. This also has resulted in excessive benefit to the assessee. We, therefore, find that the order passed by the assessing authority is erroneous as well as prejudicial to the interests of the Revenue. In these circumstances, the revision order passed by the Commissioner of Income-tax for the assessment year 2002-03 is in accordance with law and his order is upheld. The assessee fails in its appeal for the assessment year 2002-03." Thus, it is already held that the order of CIT is proper and also the adding back of book depreciation is justified, otherwise assessee will get double benefit. It is an obvious mistake committed by the AO that while allowing depreciation as per IT Rules he mistakenly did not add back the book depreciation (quantified as per companies act). This mistake was rectified in the present order. Thus, assessee doesn't have a case on merits too. Addition being interest paid to Global Trust Bank - HELD THAT:- Assessee has created M/s. Pentafour Software Employees Foundation (PSEF) for the purpose of allotment of shares to the employees and M/s. PSEF obtained loan from the Global Trust Bank and the same was deposited with the assessee as share application deposits for the purpose of utilizing the said deposit amount for allotment of shares to the employees from time to time. However, the assessee has not allotted any shares to the employees. The assessee has paid the loan interest to the Global Trust Bank against ESOP loan and the same was claimed as expenses.AO has disallowed the same on the ground that the assessee has not taken any loan for its business purpose and the same was confirmed by the Ld. CIT(A). As per the facts available on record, the PSEF obtained the loan and the same was deposited with the assessee. Whether the assessee has utilized the amount for the purpose of business of the assessee was neither examined by the AO nor by the Ld. CIT(A). Assessee was not able to produce any evidence to show that the loan amount borrowed by the PSEF deposited with the assessee has been used for the purpose of business of the assessee. This aspect needs to be examined. Therefore, we set aside the order passed by the CIT(A) and remit the matter back to the file of the AO to examine and verify as to whether the borrowed amount deposited with the assessee has been used for the purpose of the business of the assessee and if at all it was utilized by the assessee, the interest expenditure has to be allowed or otherwise, not. Ordered accordingly.
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