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2023 (3) TMI 343 - ITAT CHANDIGARHRevision u/s 263 - claim of interest expense - HELD THAT:- There is no enquiry or verification initiated and undertaken by the AO during the course of entire assessment proceedings regarding the claim of interest expense and therefore, we agree with the findings of the ld. PCIT that it is a case where the AO has failed to conduct any enquiry and verification. In light of the same, we are unable to accept the ld. AR's contention that there was no requirement in law to raise queries even on the issues on which the AO after examining the record feels satisfied as it is case where there is a failure on the part of the AO to examine the profit/loss and balance sheet where there is substantial movement in loan transactions both on the liability and asset side of the balance sheet besides claim of interest expense in the profit/loss account and the question of satisfaction will arise where the matter has been examined at first place and which is completely absent in the instant case. Bank charges and interest on car loan cannot be subject matter of disallowance u/s. 36(1)(iii) of the Act and to this extent, we agree with the ld. AR and the order passed by the AO cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the findings of the ld. PCIT are set-aside to this extent. Interest expense for availing cash credit limits from Punjab National Bank - The credits and withdrawals in such cash credit account need to be examined and a clear nexus is required to be established between the borrowed funds and making of loans/advances to Sister concerns. On the same footing, the argument of the assessee regarding availability of its own funds need to be tested and examined after analyzing the nature and position of funds at the relevant point of time of making such advances. In light of aforesaid discussions, we uphold the order of the ld. PCIT to this extent and the assessment order is set-aside to this limited extent to examine the matter afresh in light of above discussions and as per law. Needless to say, the Assessing officer shall provide reasonable opportunity to the assessee and the latter shall submit the desired information/documentation as so desired by the Assessing officer. Appeal of the assessee is partly allowed.
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