9911796707
Advanced Search 
TMI Blog2021 (5) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the ld. AO to the assessee in the order giving effect to Section 263 proceedings. Hence, the said ground is hereby allowed as academic in nature. 3. The ground No.1 raised by the assessee is challenging the validity of assumption of jurisdiction by the ld. PCIT u/s.263 of the Act. The ground No.3 raised by the assessee is challenging the issue of disallowance of interest on borrowed funds on merits. 3.1. The assessee company during the A.Y.2013-14 was engaged in business of content production and related services to various studios, advertising agencies and production houses. The return of income for the A.Y.2013-14 was filed by the assessee company on 30/11/2013 declaring total loss of Rs. 2,19,18,870/-. The assessment for the A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the fixed assets which have been acquired by the assessee at the cost of Rs. 39.71 Crores were valued by the ld. District Valuation Officer (DVO) in his report furnished u/s.142A of the Act at Rs. 8.26 Crores. Accordingly, the ld. PCIT concluded that assessee had not made any investment in plant and machinery to the extent of difference of Rs. 31.50 Crores and accordingly, the borrowed funds were not utilised for acquiring such plant and machinery thereon, consequent to which the interest expenditure on such borrowed funds need to be disallowed. Since this aspect has not been examined by the ld. AO while framing the assessment in the opinion of the ld. PCIT, it was concluded by the ld. PCIT that the order passed by the ld. AO is erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is also connected with the primary issue of over valuation of plant and machinery which is the subject matter of dispute before the ld. CIT(A). Accordingly, it was pleaded that the same cannot be the subject matter of revision proceedings by the ld. PCIT u/s.263 of the Act. 3.4. Per contra, the ld. DR vehemently supported the order of the ld. PCIT u/s.263 of the Act by stating that the ld. AO in the original proceedings had omitted to look into the utilisation of borrowings for non-business purposes for the differential cost of investment in plant and machinery to the extent of Rs. 31.50 Crores and accordingly, the interest expenditure corresponding to such non-utilisation requires to be disallowed. Hence, the ld. PCIT had rightly direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for investment in plant and machinery. Since this was not examined by the ld AO while framing the original assessment, the order passed by the ld AO becomes erroneous in as much as it is prejudicial to the interest of the revenue. The issue pending before the ld CITA is only on the depreciation on value of plant and machinery and the issue of disallowance of interest on borrowed funds thereon was not before the ld CITA. Hence the argument advanced by the ld DR that provisions of Explanation 1 clause (c ) of section 263(1) of the Act does not come into operation in the instant case, holds good and deserves to be accepted. However, we find that the ld. PCIT had presumed that the investment in plant and machinery and other assets have been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- wherein disallowance to the extent of Rs. 5,80,48,253/- was made on account of depreciation on plant and machinery. This assessment was sought to be revised by the ld. PCIT by assuming revision jurisdiction u/s.263 of the Act by treating the order of the ld. AO as erroneous and prejudicial to the interest of the revenue on the following points:- (a) Loan processing charges paid for a sum of Rs. 26,96,639/- is to be disallowed as capital expenditure (b) Production expenses of Rs. 6,22,88,762/- is to be disallowed u/s.40(a)(ia) of the Act for valuation of TDS provisions. (c) Disallowance of interest expenditure on alleged inflated value of plant and machinery on the ground that borrowed funds were utilised for non-business purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said details, it could be seen that assessee has furnished the entire details of the payees together with their PAN, service tax component, tax deducted at source, remittances of TDS thereon together with the date of payment and challan number of TDS remittance. The said statement also reveals that in respect of certain parties where payments made to the payees are below the taxable limit, the assessee has not deducted tax at source as they were below the threshold limit. It was pleaded by the ld. AR that these details were also filed before the ld. PCIT. It was also pleaded by the ld. AR that assessee has not been held to be an assessee in default u/s 201 of the Act and hence, no disallowance u/s.40(a)(ia) of the Act may be made in its ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
