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2015 (3) TMI 261 - AT - Income TaxRevision u/s 263 - allowability of interest and other incidental expenses after ascertaining whether the appellant has carried out its business activities as per the Memorandum of Association (MOA) and whether lending money to the holding and subsidiary companies constitutes its business activities - CIT has issued two notices dated 25.10.2013 as well as 28.10.2013 - Held that:- Notice issued u/s 263 is concerned, it is merely a show cause notice. It does not decide that the order is erroneous as well as prejudicial. Section 263 requires an assessee be given an opportunity of being heard. The notice represent the opportunity of hearing given to the assessee. Issuing of the notice u/s 263 does not get the assessment proceedings pending. The CIT can give in our opinion as many opportunity as he may desire. Therefore, issuing two notices to the assessee on different dates u/s 263 will not invalidate the order passed u/s 263. Company has not commenced its business or development of SEZ / real estate still the interest payable / paid on the loans and other incidental expenses were charged to the profit and loss account as expenses incurred during the previous year relevant to the assessment year and computed the business loss at ₹ 36109708/-. The assessing officer has allowed the carry forward of these expenses even though the assessee has not commenced its business. The order passed u/s 263 has to be upheld as, in our opinion, it has passed through test of fulfilment of both the conditions by the CIT that the order passed by the AO is erroneous as well as prejudicial to the interest of the revenue on the issue of claim of expenses allowed to the Assessee without verifying whether the assessee has set up / commenced the business during the year. We, therefore, dismiss the appeal filed by the Assessee by upholding the order passed u/s 263. - Decided against assessee.
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