TMI Blog2022 (11) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 - We observe that in the course of proceedings u/s 263 before the PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit Loss account of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order u/s. 92CA(3) on 28.10.2016 with an upward adjustment to the total income by Rs.8,95,67,833/-. The said upward transfer pricing adjustment included amount of Rs.8,67,68,889/- for interest on loan and Rs.27,98,944/- in respect of guarantee fee on the loan guaranteed on behalf of the Associated Enterprises (AE). Apart from the said transfer pricing adjustment, Ld. AO made certain other disallowances and completed the assessment at total income of Rs.22,77,37,440/-. The assessment order went in appeal before the Coordinate Bench of ITAT, Kolkata in ITA No. 2169/Kol/2017 dated 15.03.2019 wherein addition made in respect of transfer pricing adjustment were deleted by the Coordinate Bench. 4. Ld. Pr. CIT on perusal of the assessment records was satisfied that it is a case of erroneous assessment in so far as it was prejudicial to the interest of revenue. Accordingly, a show cause notice u/s. 263 of the Act was issued on the assessee. Two issues were raised by the Ld. Pr. CIT in the show cause notice which are reproduced as under: The assessee company debited depreciation of Rs.903 lakh in P L A/c which includes fluctuation loss of Rs.175 lakh. However, while claiming depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case for the same year in ITA No. 2169/Kol/2017 wherein the addition relating to transfer pricing adjustment made on account of receipt of guarantee fee charged to the AE was deleted and the appeal of the assessee was allowed vide order dated 15.03.2019. Accordingly, ld. Counsel for the assessee submitted that Ld. Pr. CIT had no jurisdiction to raise this issue in the revisionary proceedings when the higher wisdom has already dealt with it in favour of the assessee. 7.1. On the first issue relating to claim of depreciation, it was submitted by the Ld. Counsel that assessee had availed foreign currency term loans from EXIM Bank for capital expansion spread over years starting from FY 2006-07. There were foreign exchange fluctuations in respect of foreign currency denominated loans, part of which were repaid during the year. He submitted that there is a difference in treatment for the foreign exchange fluctuation in the books of account and in the computation of income under the Act. For the purpose of treatment in books of account, Accounting Standard-11 (AS-11) issued by the Institute of Chartered Accountants of India (ICAI) deals with the effect and changes in foreign exchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Based on these submissions, Ld counsel strongly claimed that detailed enquiry and examination has been made by the Ld. AO in the course of assessment and the allegation by the Ld. Pr. CIT that the order is passed without making enquiries or verifications is baseless, devoid of any merits. He, thus submitted that the assessment order is neither erroneous nor prejudicial to the interest of revenue and, therefore, the impugned order u/s. 263 of the Act ought to be quashed. 9. Per contra, Ld. CIT, DR placed reliance on the order of Ld. Pr. CIT and submitted that no prejudice is caused to the assessee since Ld. Pr. CIT has directed the Ld. AO to examine the issue afresh and pass the assessment order accordingly. 10. We have heard the rival contentions and perused the material available on record. Out of the two issues raised by the Ld. Pr. CIT in the impugned order, we find that the second issue relating to transfer pricing adjustment made by the Ld. TPO on receipt of guarantee fees by the assessee from its AEs has been deleted by the Coordinate Bench of ITAT, Kolkata in assessee s own case for the very same year under consideration vide order dated 15.03.2019 in favour of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee itself for the very same year under consideration has held in its favor. 12. From the above factual matrix of the issue raised by the ld. PCIT, we find that he has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 of the Act. We observe that in the course of proceedings u/s 263 of the Act before the Ld. PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the Ld. PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. 13. For this, let us take the guidance of judicial precedence laid down by the Hon ble Apex Court in the case of Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordships have held that twin conditions need to be satisfied before exercising revisional jurisdiction u/s 263 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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