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TMI Blog2014 (1) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... ts involved in A.Y. 2008-09 which are identical to the facts involved in A.Y. 2009-10 except the difference in amounts. 3. The assessee in the present case is a banking company which filed its return of income for A.Y. 2008-09 declaring total income of Rs. 9682,07,34,108/-. In the assessment completed u/s 143(3) of the Act vide an order dtd. 29-3-2010, the total income of the assessee was computed by the A.O. at Rs. 15766,08,14,320/- after making various additions. The records of the said assessment came to be examined by the ld. CIT and on such examination, he found that the broken period interest of Rs. 2150,10,16,116/- relating to securities bought in the year but held in the stock was held to be not allowable by the A.O. He noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by provision of section 263 due to the Assessment Order being not erroneous and prejudicial to the interest of revenue, as the law does not superimposite of view." 4. According to the ld. CIT, the submissions made by the assessee on the merit of the addition were not relevant in the context of proceeding u/s 263 of the Act. As regards the other points raised by the assessee, the ld. CIT held that if the broken period interest paid was an expense, the same should have been added to the valuation of closing stock like any other traders. His main objection for treating the assessment made by the A.O. as erroneous on the issue of broken period interest, however, was about the protective addition made by the A.O. on this issue. He held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue and there was no error in the order of the A.O. as alleged by the ld. CIT. He also contended that the addition on account of broken period interest, if made on substantive basis as directed by the ld. CIT, would result in double deduction and that is why the said addition was rightly made by the A.O. on protective basis. 6. The ld. D.R., on the other hand, relied on the impugned order of the ld. CIT passed u/s 263 of the Act in support of the Revenue's case. 7. We have considered the rival submission and also perused the relevant material available on record. It is noted that the addition on account of disallowance of broken period interest was made by the A.O. to the income of the assessee on protective basis for the following rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of broken period interest of Rs.2150,1O,16,116/- will simultaneously become taxable on substantive basis. That means overall addition of Rs. 2150,10,16,116/- will be required to be made on the returned income in respect of issues of interest accrued but not due and broken period interest". 8. As clearly mentioned by the A.O. in para No. 5.8, although the disallowance on account of broken period interest relating to securities bought in the year under consideration but held in the stock as on 31-3-2008 was required to be disallowed, the interest accrued but not due to the extent of Rs. 3804,07,30,799/- having been added to the income of the assessee, the disallowance on account of broken period interest was not required to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly because he read para 5.8 of the A.O.'s order on isolation without considering the observations made by the A.O. in para 5.9 while coming to a conclusion that there was an error in the order of the A.O. in making the addition on account of broken period interest on protective basis and not substantive basis. We are, therefore, of the view that there was no error in the orders of the A.O. passed u/s 143(3) of the Act for both the years under consideration on this issue as alleged by the ld. CIT calling for any revision u/s 263 of the Act. In that view of the matter, we set aside the impugned orders of the ld. CIT passed u/s 263 of the Act for assessment years 2008-09 and 2009-10 and restore that of the AO passed u/s 143(3) of the Act. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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