Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 389 - AT - Income TaxRevision u/s 263 by CIT - Irregular allowance of long-term capital loss wherein it has been held that the assessee has applied the cost of inflation index on foreign currency while computing the capital gain on the assets acquired out of foreign currency - HELD THAT:- As PCIT has given a reason that the order of the learned assessing officer is not in accordance with the concept of cost inflation index. In fact, assessee has not invested in foreign currency but in INR. Even other second proviso to section 48 is only with respect to Nonresident Assessee. By computing long term capital gain by incorrect method assessee has got the benefit of Foreign Exchange Fluctuation as well as cost inflation index both which is not in accordance with Income tax Act. In view of this, to this extent, on this issue we find that the jurisdiction assumed by the learned PCIT holding that there is an irregular allowance of long- term capital loss of Rs. 99,675.31 lakhs and higher capital loss of Rs 502.62 Cr is justified. Therefore, on this issue the order under section 263 of the income tax act passed by the learned PCIT is sustained. Excess bad debts allowed - Order of the PCIT does not show that what is the error in allowing the claim of the assessee wherein the amount is debited to the profit and loss account as write off .therefore, on this issue we do not find that there is any error in the order of the learned assessing officer in allowing the claim of the assessee which is after calling for the explanation and correctly allowed. Therefore, on the same issue of the bad debts allowed the order of the learned PCIT is not sustainable. Accordingly, ground number 3 of the appeal is allowed to the extent indicated above. Provision for depreciation of investment - The provision for securities held as investment was added to the total income of the assessee PCIT found that the book loss claimed by the assessee have been claimed by the assessee as realized loss on investment and reduced from the book loss of investment. Therefore, he was of the view that the amount is being actual loss and not a provision for depreciation of investments so it was required to be disallowed and added to the total income of the assessee. The AO has not verified this amount. During hearing before us, nothing was shown to us that this issue was examined by the learned assessing officer. Therefore, this issue is squarely covered by the explanation 2 to section 263 of the act where the assessing officer has not made any enquiry on the issue and has allowed the claim of the assessee, to such extent the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue. Therefore, on this issue we uphold the order of the learned PCIT. Excess deduction allowed u/s 36 (1) (via) - only argument of the learned authorized representative is that the quantum deduction is linked to the total income and therefore any enhancement made in the income returned to additions/disallowances impact the quantum of deduction. However, we find that it cannot be the case that the amount of deduction is allowable to the assessee higher than what is not claimed in the return of income without there being a revised return before the LD AO. Therefore, it is in clear violation of the decision of Goetz India limited [2006 (3) TMI 75 - SUPREME COURT] Therefore, we uphold the action of the learned PCIT in holding that claim allowed by the assessing officer higher than that claimed in the return of income without assessee filing any revised return is definitely erroneous and prejudicial to the interest of the revenue - action of the learned PCIT is upheld in holding that assessee has been allowed excess deduction u/s 36 (1) (viia). Excess grant of deduction under section 36 (1) (vii) of the act with respect to the aggregate rural advances - There is an error in the order of the learned assessing officer in granting deduction merely on the submission of the assessee and without making any enquiry about the various branches, which are claimed to be eligible for deduction under this section on the advances. Thus, non-examination of the details clearly makes the order of the learned assessing officer erroneous and prejudicial to the interest of revenue. Further, it is the claim of the assessee that this is based on the audit objection raised by the Director-General of Audit, Mumbai. We do not find any infirmity in the order of the PCIT because even if there is an audit objection, he has applied his mind independently and held that order of the AO is erroneous to that extent. In the result on this issue, we hold that the learned PCIT has correctly assumed the jurisdiction and correctly held that the order of the learned AO is erroneous and prejudicial to the interest of revenue. To that extent, the order of the learned PCIT is sustainable on this issue. Accordingly, ground number 6 of the appeal is dismissed. Excess deduction u/s 36 (1) (viii) - Admittedly, no revised return was filed by the assessee on this account. The only claim of the assessee is that the quantum of deduction is linked to the total income and therefore the enhancement in the income returned due to additions/disallowances which has impacted the quantum of deduction. The learned PCIT has held that in view of the decision of the honourable Supreme Court [2006 (3) TMI 75 - SUPREME COURT] the allowance of claim higher than the amount claimed in the return of income without revising the return of income makes the order of the learned assessing officer is erroneous and prejudicial to the interest of revenue. We do not find any infirmity in the order of the learned principal Commissioner of income tax on this account is not following the decision of the honourable Supreme Court makes the order of the learned assessing officer is erroneous and prejudicial to the interest of the revenue. Excess allowance of deduction u/s 36 (1) (vii) - During the course of assessment proceedings neither there is any discussion not there is any detail called for by the assessing officer and therefore we do not find infirmity in the order of the learned principal Commissioner of income tax in holding that not making any enquiry by the learned assessing officer on this aspect makes the order of the learned AO erroneous so far as judicial to the interest of the revenue. Accordingly, we dismiss ground number 9 of the appeal of the assessee. Appeal filed by the assessee is partly allowed.
|