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2023 (4) TMI 91 - ITAT RAJKOTRevision u/s 263 - as per PCIT it is not clear what was the purpose for which interest bearing loan was taken and where the same was utilized - AO has not verified the aspect of the “correct amount of interest expenditure which was claimed against interest income” - interest bearing funds utilized by the assessee to earn interest income on loans and deposits to an extent and the remaining portion of interest bearing loan was not utilized for the purpose of earning interest by the assessee - HELD THAT:- Assessment of the assessee was taken up under “limited scrutiny” under CASS for verifying the following CASS reasons “large deduction claimed under Section 57, higher turnover reported in Service Tax Return as compared to ITR”. Accordingly, the very purpose of initiating assessment proceedings under “limited scrutiny assessment” was with a view to examine large deduction claimed u/s 57. Notice was issued by the AO on 04.03.2019 u/s 142(1) in which a specific query was put forth to the assessee regarding the claim of deduction u/s 57 asking for details of expenditure claimed u/s 57 against the head “income from other sources”. Assessee had filed reply in which he had given details of interest expenditure claimed by the assessee during the year under consideration. Therefore, it cannot be stated that there was any lack of enquiry or non-application of mind by the AO in respect of justification for expenses claimed by the assessee u/s 57 - Also in the immediate preceding year similar claim of interest deduction was allowed to the assessee under Section 36(1)(iii) and hence taking into consideration the above fact the AO did not make any addition on this aspect. We are of the considered view that there is neither any lack of enquiry by the A.O. during the course of assessment proceeding and nor there is any prejudice which has been caused to the Department looking into the instant set of facts. Accordingly we are directing that the 263 order passed by the Ld. PCIT is liable to be set-aside. Appeal of the assessee is allowed.
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