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TMI Blog2019 (12) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14,96,63,312/-. Subsequently, the ld. PCIT examined the record of assessment and found that the assessee earned an interest of Rs. 9,47,04,585/- on FDRs, but instead of crediting the same to the Profit & Loss account, the assessee deducted the same from the value of inventory as shown in the balance sheet; and that in 3CD report, the tax auditor certified the amount of Rs. 9,47,04,585/- pertains to other income and has not been credited to the profit and loss account. The ld. PCIT held that prima facie non-consideration of this constitutes the assessment order erroneous in so far as it is prejudicial to the interest of Revenue. 4. He issued a notice dated 20.02.2019 and obtained the written submissions of the assessee. While referring to the provisions of section 263 of the Act, ld. PCIT was of the opinion that the order u/s. 143(3) of the Act was passed by the Ld. Assessing Officer without making enquiries into the claim of the assessee and in view of the decision in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd. 227 ITR 172, the taxability of such interest needs to be examined and for non-examination of the same, the order renders itself erroneous in so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions, the ld. AR placed reliance on the decision in the case of ITO vs. DG Housing Projects Ltd., 343 ITR 329, PCIT vs. Modicare Ltd.in ITA No. 759/2016 and DIT vs. Jyoti Foundation, 357 ITR 388. He further submitted that Explanation 2 to section 263 of the Act has no retrospective application and it is held so by Mumbai Bench of Tribunal in Shri Narayan Taturane vs. ITO (ITA No. 2690/Mum/2016 and M/s. Amira Pure Foods Pvt. Ltd. Vs. PCIT in ITA No. 3205/Del/2017. 7. The ld. AR further submitted that the decision of Hon'ble Apex Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd. (supra) has no application to the facts of the case inasmuch as in that case the business of the assessee was not commenced, whereas admittedly in the present case the business of the assessee had already been commenced which fact the PCIT failed to take into consideration, and therefore, the decision of Apex Court in M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) has no application to the facts of the case. Ld. PCIT was not justified in passing the order u/s. 263 of the Act holding it erroneous in so far as it is prejudicial to the interest of Revenue. 8. Per contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare premium received and reconciliation of AIR information. Vide reply dated 25.11.2014 (page 66 of the paper book), at point No. 3 (at page 67), the assessee explained that the difference in the amount as per Form 26AS and ITR was due to the difference in the interest received from the banks duly accounted and considered in the financial statements of the company and the ITR and given that the Real Estate projects being undertaken by the company is under consideration, the interest received during construction period has been adjusted/reduced against the cost of the project. Vide page No. 118 of the paper book, the assessee submitted the bifurcation of the inventory showing that the assessee paid interest and finance charges to the tune of Rs. 68,35,65,792/-, whereas the assessee received interest income on fixed deposits to the tune of Rs. 9,47,04,585/-. It is submitted that both these items are taken to the inventory. 11. Further, it could be seen from the record that vide letter dated 14.09.2017, the ld. Ld. Assessing Officer issued notice to the assessee proposing rectification in respect of certain items including the one relating to interest of Rs. 9,47,04,585/- to which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erted by Finance Act, 2015 w.e.f. 01.04.2015 would not impact the assessment earlier to 2014-15 and such a decision was followed by the Delhi Bench of Tribunal in the case of Arun Kumar Garg (HUF) vs. PCIT in ITA No. 3391/Del/2018 for the assessment year 2014-15 and by order dated 08.01.2019 held that Explanation 2 to section 263 of the Act is only prospective in nature. 14. In the case on hand, the ld. PCIT while reading the provisions of section 263 of the Act and the decision of Hon'ble Apex Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) reached a conclusion that inasmuch as there was no specific inquiry by the Assessing Officer, the assessment order was erroneous in so far as it is prejudicial to the interest of Revenue. He does not conduct any independent enquiry to reach the conclusion that the assessment order was erroneous in so far as it is prejudicial to the interest of Revenue. If we accept the submission of the ld. DR that since all the material was available on record, there was no need for the PCIT to conduct any further inquiry, it also inures to the benefit of the assessee because all these things are available on record and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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