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TMI Blog2014 (5) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the facts and in the circumstances of the case and in law, learned CIT erred in assuming jurisdiction u/s 236 of the Act as to how the underlying order is erroneous and prejudicial to interests of revenue on only left of charging of interest and finally leaving the matter open which vitiates the jurisdiction:- "Thus, in cases of wrong opinion or finding on the merits the Commissioner of Income-tax has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. The Commissioner of Income-tax cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. 4. That on the facts and in the circumstances of the case and in law, learned CIT erred in treating the assessee's explanation on non charging of interest (on adopted loans originally advanced by Petersen & family to companies acquired by assessee) as non satisfactory and wrongly directing the ld Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhs CHF. The purchase price consisted to 31 lakhs CHF against equity capital and 6 lakhs CHF against purchase/ replacement of interest free loans extended by Petersen & family to the above said companies. The acquiring company was under an obligation to replace the interest free loans extended by Petersens on the existing terms and conditions and it was part and parcel of acquisition cost, and hence no interest has been charged on that. Name of Borrower Amount o/s at the time of acquisition Amount (in CHF) Amount (in Rs.) Expo Display Holding CHF 496600.00 CHF 196600.00 78,87,415.00 Expo Product Trading CHF 1003400.00 CHF 403400.00 1,61,84,045.00 Total CHF 1500000.00 CHF 600000.00 2,40,71,460.00 According to the ld AR from a perusal of the purchase agreement it will be clear that the loan granted to subsidiary company was part & parcel of acquisition agreement and given on the same terms and condition as extended by previous promoter of the company to the acquired company. Therefore in the said circumstances question of chargeability of interest does not arise. 7. The ld AR contended that CIT erred in assuming jurisdiction u/s 263 of the Act without establishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore ld DR does not want us to disturb the order of the ld CIT. 10. We have heard both the parties and have perused the records and have gone through the case laws cited by both the sides. 11. On a perusal of the records, we find that the ld CIT while invoking revisional jurisdiction u/s 63 of the Act, had recorded the following issues which he felt was not investigated nor any inquiry was conducted. It would be apposite to reproduce the same. "On examination of the income tax assessment record of M/s Insta Exhibition Pvt. Ltd. for Assessment Year 2008-09, it has been revealed that during the assessment proceedings, the following aspects were considered and verified by the Assessing Officer while completing assessment. Further, no inquiry/ investigation seems to have been carried out in respect of the undermoted points:- i) The assessee has incurred expenses of Rs. 52,14,898/- towards acquisition of Expo Display Holding AG, Switzerland and Expo Products Trading AG, Switzerland. The Assessing Officer has amortized the expenses over a period of 5 years and allowed 1/5 of such expenses during the year under consideration. Since the assessee has acquired companies and their m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation (d) and as such I refrain from deciding this issue. As regards, the third issue namely the assessee's claim of deduction u/s 80IC, I find that the Assessing Officer for the Assessment Year 2009-10 in the assessment order dated 29.12.2011 in assessee's own case has allowed the deduction u/s 80IC after a detailed discussion. It is stated that after commission was issued the ADIT(Inv.), Dehradun has conducted a detailed enquiry about the business activity of the assessee located at SIDCUL, Haridwar and submitted a report on the basis of which the Assessing Officer has allowed the claim of deduction u/s 80IC. In view of the same I am of the opinion that the claim of the assessee for deduction u/s 80IC has been rightly allowed and no interference is called for." 13. So we find that only one issue regarding advancing of loan by the assessee company to its overseas subsidiary company on which no interest was charged was decided as follows:- "As regards to the issue of advancing loan to its overseas subsidiary company on which on interest is charged which is evident from the Schedule-O of the P&L A/c. I find that the explanation offered by the assessee is not satisfactory. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie why he is of the opinion that the assessment order is erroneous and prejudicial to the interest of the Revenue. This is the first step necessary to initiate the revisional jurisdiction, thereafter, if it is a case, wherein, no inquiry or investigation is conducted he can cancel the assessment order and direct the Assessing Officer to conduct enquiry on the issue or he can himself inquire and pass even orders enhancing the assessment, of course after notice to the assessee. However, when the Assessing Officer has conducted an inquiry and has sought explanation and documents from the assessee and has applied his mind, and allowed the claim of the assessee, then the ld CIT while exercising the revisional jurisdiction may differ from the view of the Assessing Officer, provided he is able to demonstrate that the views taken by the Assessing Officer is incorrect, invalid and not sustainable in the eyes of law. For that the CIT has to record reason and finding in this respect. So, when a CIT after a perusal of the assessment records finds that there is no investigation or inquiry conducted by the Assessing Officer on an issue relevant to a case, the CIT can straight away record this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by ld Assessing Officer and we have filed our reply as follows: "During the year, the assessee company has acquired 100% shareholding in Expo display Holding AG and Expo Product AG companies based in Switzerland from Mr. Petersen & family, Swiss national at a total purchase price of 37 lakhs CHF. The purchase price consisted of 31 lakhs CHF against equity capital and 6 lakhs CHF against purchase/ replacement of interest free loan extended by pertersen & family to the above said companies. The acquiring company was under an obligation to replace the interest free loans extended by Ptersens on the existing terms & conditions and it was part and parcel of acquisition cost, and hence no interest has been charged on that. Name of Borrower Amount o/s at the time of acquisition Amount (in CHF) Amount (in Rs.) Expo Display Holding CHF 496600.00 CHF 196600.00 78,87,415.00 Expo Product Trading CHF 1003400.00 CHF 403400.00 1,61,84,045.00 Total CHF 1500000.00 CHF 600000.00 2,40,71,460.00 The share purchase agreement is enclosed herewith as per annexure-1 From the share purchase agreement it is clear that loan granted to subsidiary company was part and parcel of acquisit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owability of the claim by conducting enquiries to ascertain as to whether the assessee has fulfilled all the conditions laid down in the aforesaid section. We find that in the original assessment order there is no mention of this claim at all. However, we find that the ld CIT has recorded his satisfaction about this claim after taking note of the fact that in the subsequent Assessment Year 2009-10, Assessing Officer has conducted detailed investigation and was in possession of the detailed enquiry by ADIT (Inv.) Dehradun. We take note of the fact that during revisional proceeding the AR of the assessee while responding to this issue has stated that the Assessing Officer has orally discussed this issue with him during assessment proceeding which obviously means there was no records to substantiate that the Assessing Officer had orally enquired about the said claim and we find that the AR did not produce or point out from the copy of the order-sheet of the Assessing Officer to substantiate this fact which means that ld CIT was justified in assuming that there was no investigation/ enquiry into this aspect and led the ld CIT to believe that there was no inquiry into this aspect by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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