TMI Blog2017 (8) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... , held and observed that the order of assessment would be open to revision provided twin conditions of same being erroneous and prejudicial to the interest of Revenue are satisfied. It is also well settled that if after proper inquiries, the Assessing Officer has adopted a view which is a plausible one, the view would not be open to revision by the Commissioner. The additional contention of the petitioner of the very jurisdiction of the Commissioner to revise an order of assessment passed after the draft order is placed before DRP in terms of section 144C of the Act is an interesting contention. However, we do not find it necessary in the present petition to enter into such an issue, since on facts we find that the Commissioner could not have invoked revisional powers. - Special Civil Application No. 4036 of 2016 - - - Dated:- 22-8-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Petitioner : Mr RK Patel, Advocate For The Respondent : Mr Manish Bhatt, Senior Counsel with Mrs Mauna M Bhatt, Advocate ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 8.3.2016 issued by the respondent Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividend when earned would be chargeable to tax under the head Income from other sources. 3. In terms of section 144C of the Act, the Assessing Officer was required to pass a draft order of assessment, invite the assessee to raise his objections and place such materials before the Dispute Resolution Panel ( DRP for short) comprising of three Principal Commissioners or Commissioners of Incometax. The Assessing Officer accordingly passed the draft order on 30.3.2013 and supplied the copy thereof to the petitioner. In such draft order, the Assessing Officer had raised multiple issues. We are however, concerned with only one of them namely, of the interest and finance charge expenditure. In this respect the Assessing Officer noted at length the averments of the assessee. The Assessing Officer rejected the assessee's contention that expenditure being in the nature of business expenditure, should have been allowed as such. He however, accepted the assessee's alternative contention that, in any case, the same would be allowed under section 57(iii) of the Act. The Assessing Officer made the following observations : The submission of the assessee has been carefully consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer referred to the decision of Supreme Court in case of Rajendra Prasad Moody (supra). 5. To take this order of assessment in revision, the Commissioner issued the impugned notice. He indicated his reasons why according to him, the order of assessment was prima facie erroneous and prejudicial to the interest of the Revenue. His observations are as under : 3. Examination of the assessment record including scrutiny assessment order shows that the assessment passed by the Addl. CIT, Vapi Range, Vapi, suffers from following mistakes/defects rendering the order erroneous as well as prejudicial to the interest of revenue. ( a) The assessee during the year under consideration had debited interest and finance charges of ₹ 2,36,18,6l2/on account of loan taken for investment in preferred stock of step down subsidiary company. The A0 disallowed this interest from business expenses but, he accepted the contention of the assessee regarding allowability of the said interest expenditure u/s. 57(iii) of the I.T. Act. The A0 should have properly verified the nature of investment made by the assessee in subsidiary company. ( b) It is evident from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion but accepted the alternative ground and granted relief under section 57(iii) of the Act. Thus the Assessing Officer after making full inquiry, adopted the view which was entirely plausible. It was thereafter not open for the Commissioner to overrule such opinion by taking the order in revision. In this regard, heavy reliance was placed on the decision in case of Malabar Industrial Co. Ltd. v. Commissioner of Incometax reported in 243 ITR 83. Counsel further submitted that the Assessing Officer in his draft order had accepted this alternative contention. The petitioner therefore, raised no objections with respect to this proposal of the Assessing Officer in the draft order. However, since the petitioner had raised objections to the other proposed additions, the draft order was placed before the DRP. Thus the entire draft order was under consideration before the DRP. The Assessing Officer passed the order of assessment in light of the directions issued by the DRP as required under the law. Thus the final order of assessment which the Assessing Officer passed was with concurrence of the DRP and was not open to revision at the hands of the Commissioner. 8. On the other hand, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requirement of section 57(iii) of the Act since it was necessary that primary motive of incurring the expenditure should be directly to earn the income falling under the head Income from other sources . The Commissioner did not dispute the assessee's stand that through the stocks of the subsidiary purchased by the petitioner in due course, dividend would be paid and that such dividend would be taxable as income from other sources. He however, harped upon the issue that such investment should be made with a primary motive of earning income and that such motive should have direct link with the purpose of earning income. Section 57(iii) of the Act allows deduction while computing the income chargeable under the head Income from other sources , any other expenditure laid out or expended wholly and exclusively for the purpose of making or earning such income. It was in this context the Assessing Officer had accepted the assessee's contention that if the investment is treated as not having been expended in the assessee's business in USA and therefore, wholly and exclusively for the purpose of business, the same should be treated as one for earning income from other sou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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