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2019 (3) TMI 812

ased on fact that it was spared over on succeeding years - Revision of order prejudicial to revenue - HELD THAT:- so far as interest of NPA's is concerned, it has to be considered and included only after realising the income from NPAs. This observation was made following CIT Vs Elgi Finance Limited.[2007 (6) TMI 180 - MADRAS HIGH COURT] wherein it had been held that the interest computed as taxable income has to be deducted. It was therefore found that no error had crept in the assessment order. - The Income from the relevant transactions, when they were treated as non securitized were spread over the assessment years from 2005-2006 to 2011-2012, whereas the income from the very same transactions had been offered in full for the assessm .....

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Section 263 of Income Tax Act, 1961?; (b) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the claim for deduction of ₹ 1,83,16,468/- being deduction on securitization income from returned income, which was not even claimed in the revised return and as such is contrary to the Judgement of the Supreme court in the case of Goetz India Limited., reported in 284 ITR 323? 3. Heard Mr.T.R.Senthilkumar, learned Senior Standing counsel for the appellant and Mr.R.Sivaraman, learned counsel for the respondent. 4. The facts leading to this Appeal are that the Commissioner of Income Tax, Chennai -III had invoked the provisions of Section 263 of the Income Tax Act to revise the Assessment Order dat .....

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s / investigations and there was no loss to the revenue because the claims of deduction made were according to law. It was also pointed out by the respondent Assessee that in the earlier assessment year, a similar issue had been considered and decided in favour of the Assessee. With respect to the securitization aspect, it was claimed that the income from securitization had been wrongly offered to tax in the year under consideration. The said income was spread over the assessment years from 2005-2006 to 2011-2012. This has been allowed by the Assessing Officer. 7. The Commissioner of Income Tax however set aside the assessment order on the following issues:- (i) Verification to be made regarding the extent of income arising to the assessee .....

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subject. Holding as above, the Tribunal allowed the Appeal of the respondent Assessee. 11. The first substantial question of law relate to whether the Tribunal was right in questioning the revisional order passed by the CIT under Section 263 of the Income Tax Act 1961. Section 263 of Income Tax Act 1961 is as follows:- Revision of order prejudicial to revenue: 263(1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquir .....

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basis. In view of the same, the Tribunal was of the view that the lower authorities had erred in treating the interest on non-performing assets as income of the Assessee and directed the Assessing Officer to delete the said interest from the computation of taxable income. The interest from such non-performing assets would be taxed in the appropriate assessment years on the basis of actual receipt. It has transpired during arguments that this decision was challenged before the Hon'ble Supreme Court but the Special Leave Petition filed by Revenue was dismissed. 15. With respect to the second substantial question of law, Goetze (India) Limited., Vs. Commissioner of Income - Tax reported in (2006) 284 ITR 323 (SC), related to a case where f .....

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ized, no prejudice was caused to the Revenue. 17. Consequently, it is seen that both the pre-requisite requirements for invoking revisional powers under Section 263 were not satisfied namely, an error and a prejudice caused to the Revenue. 18. We therefore hold that the Appeal of Revenue does not have any merit and consequently, the substantial questions of law are answered in favour of Assessee and the Tribunal was right in quashing the revisional order passed by the CIT under Section 263 of the Income Tax Act and the Tribunal was also right in holding that the claim for deduction on securitization income from return income. The Judgement of the Hon'ble Supreme Court in the case of Goetze (India) Limited., Vs. Commissioner of Income - .....

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