TMI Blog2022 (4) TMI 1509X X X X Extracts X X X X X X X X Extracts X X X X ..... .w.r. 8D. After having examined replies of the assessee and also suo-motu disallowance made by the assessee, the Assessing Officer enhanced disallowance u/s. 14A - Therefore, it cannot be said that the Assessing Officer has made no enquiries on this issue. The findings of the PCIT on this issue are contrary to facts and documents on record. Depreciation in value of investments - PCIT while passing the impugned order has not touched this issue. Interest on NPA - Hon ble Apex Court in the case of CIT vs. Vasisth Chya Vyapar Ltd [ 2018 (3) TMI 56 - SUPREME COURT] has held that NPA on which no interest was received and possibility of recovery was almost nil, it could not be treated to have been accrued in favour of assessee and was therefore not exigible to tax. This issue was also considered in the case of DCIT vs. Bank of Maharashtra [ 2019 (6) TMI 1456 - ITAT PUNE] . The issue was enquired into by the AO during assessment proceedings. Even otherwise on merits the issue is squarely covered in favour of the assessee by the decision of Hon ble Supreme Court of India render in the case of Vasisth Chay Vyapar (supra). The PCIT without pointing queries that the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring assessment proceedings was deferred payment guarantee commission - We find in reply to notice as well as during revision proceedings the assessee had pointed that the issue is regarding Revenue Recognition Policy. The assessee has shown that as per Revenue Recognition policy guarantee commission is recorded in books on realization basis. Hence, on merits revision proceedings are not legally sustainable on this issue as well. Assessee appeal allowed. - ITA NO.1685/MUM/2020 - - - Dated:- 11-4-2022 - SHRI VIKAS AWASTHY, JUDICIAL MEMBER SHRI M. BALAGANESH, ACCOUNTANT MEMBER For the Appellant : Shri Ananthan Ms. Lalitha Rameswaram For the Respondent : S/Shri Rahul Raman Milind Chavan ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Principal Commissioner of Income Tax -2, Mumbai ( in short the PCIT-2 ) dated 13/03/2020 for assessment year 2015-16 passed under section 263 of the Income Tax Act, 1961 ( in short the Act ). 2. Shri Ananthan appearing on behalf of the assessee submitted that the assessment for assessment year 2015-16 in the case of assessee was finalized vide order dated 28/12/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to then assessment year 2015-16 at page 121 of the paper book. The ld. Authorised Representative for the assessee submitted that the assessee was required to contribute to the Pension Fund for the retirement liability of its employees. The fact that Bank has paid Rs.72.15 crores as contribution to pension fund during the Financial Year 2014-15 relevant to assessment year 2015-16 and has been reflected in the books as per Accounting Standard -15 (AS-15) has been mentioned in the Tax Audit Report in the form of Note. Therefore, the said amount is eligible for deduction u/s. 43B of the Act on payment basis. The Assessing Officer after examining the issue accepted the contentions of the assessee and made no addition. (ii) Disallowance u/s. 14A of the Act: The ld. Authorised Representative for the assessee submitted that the assessee has earned exempt income of Rs.12.00 Crores. The assessee has suo-motu made disallowance of Rs.9.00 lakhs. The Assessing Officer during assessment proceedings vide notice u/s. 142(1) of the Act(supra) raised a specific query with regard to the disallowance u/s. 14A r.w.r. 8D. A query was also raised by the Assessing Officer vide another notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the position explained by the assessee there was no reason for the PCIT to refer this issue for reexamination by the Assessing Officer. (vi ) Loss on sale of asset to ARC: The ld. Authorised Representative for the assessee submitted that during assessment proceedings this issue was examined by the Assessing Officer. He referred to the query raised by the Assessing Officer vide notice dated 16/11/2017 at Sl.No.33 of the said notice. The ld. Representative for the assessee asserted that during the period relevant to the assessment under appeal there was no loss on sale of Asset to ARC. On the contrary, the assessee had gained and the same was offered to tax. The ld. Authorised Representative for the assessee referred to the details of asset sold to ARC at page 51 of the paper book. This fact was brought to the notice of PCIT in reply to the show cause notice as well. (vii) Interest on perpetual bonds: The ld. Authorised Representative for the assessee submitted that during assessment proceedings the Assessing Officer had raised specific query with regard to interest expenses claimed as deduction including broken period expenses vide notice dated 16/11/2017. The assessee m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly not made enquiries. The assessee in appeal has assailed the action of PCIT in exercising revisional powers u/s. 263 of the Act as well challenged the additions proposed by the PCIT on merits. The PCIT has highlighted seven issues in the notice u/s. 263 of the Act which have purportedly not been examined by the Assessing Officer. Our observations on the findings of the PCIT on the issues are as under: (i) Contribution to Pension Fund: We find that this issue was examined by the Assessing Officer during the assessment proceedings. A specific query was raised by way of notice u/s. 142(1) dated 19/12/2017. In reply to the notice, the assessee made detailed reply, reference has also been made to the Tax Audit Report (at page 121 of the paper book), where the Auditors have made note that the Bank has paid Rs.72.15 Crores as contributing to Pension Fund during the FY 2014-15 which has not been debited to P L account and carried as prepaid liability as per AS-15. As is evident from the documents on record and notice issued u/s 142(1) of the Act, this issue was examined by the Assessing Officer. The payment of Pension Fund was allowed on payment basis. The assessee has been able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the Assessing Officer. However, in reply to the notice u/s. 263 of the Act, the assessee has explained that the guarantee commission is recorded in the books on realization. The ld. Authorised Representative for the assessee referred to the Revenue Recognition Policy of the assessee Bank. A perusal of the same reveals that bank guarantee commission is recognized on realization basis. The relevant extract of Revenue Recognition policy from the Annual Report of the assessee is reproduced for the sake of completeness: Commission on Letters of Credit/Bank Guarantees/Government Business/Distribution of Insurance Policies/Mutual Fund Products/ASBA, Locker Rent,Interest on Refund of Taxes, Dividend Income on units of Mutual Funds, Rental Income and Service Charges on various Deposit Accounts are recognized on realization basis. Thus, from the above it is evident that the Guarantee Commission are recorded in the books on the basis of realization. The query raised by the PCIT with regard to deferred payment receipt on Guarantee Commission is merely on surmises and conjectures, hence, without any merit. (vi) Loss on Sale of Asset to ARC: The ld. Authorised Represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 263 is; if in the opinion of PCIT the assessment order is passed without inquiring into the claim of assessee the order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue. The PCIT has invoked Explanation 2 in a mechanical manner without any basis, contrary to facts and documents on record. As has been observed earlier in the preceding paras of this order that it is evident from records that the Assessing Officer has made necessary enquiries during assessment proceedings on the issues flagged in revision. The PCIT has not highlighted as to what inquiries the Assessing Officer has failed to make. The Hon ble Bombay High Court in the case of CIT vs. Nirav Modi reported as 390 ITR 292, has held as under:- 9. Once the Assessing Officer is satisfied with the explanation offered on inquiry, it is not open to the CIT in exercise of his revsional powers direct that further enquiry has to be done. At the very highest, the case of the Revenue is that this is a case of inadequate inquiry and not of no enquiry. It is well settled that the jurisdiction under Section 263 of the Act can be exercised by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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