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TMI Blog2023 (4) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the learned Principal Commissioner of Income Tax (Pr. CIT) erred in invoking the provisions of section 263 of the Act and setting aside the order of the Ld. A.O. 2. On the facts and circumstances of the case & in law, the learned Pr.CIT has erred in Invoking section 263 of the Act on the same issues which specifically formed a part of the CASS limited scrutiny, which were adjudicated by the Ld. AO after due application of his mind, and passed the order u/s 143(3) of the Act. This tantamount to substituting the opinion of the Ld. AO by the Pr. CIT which is bad in law. 3. On the facts and circumstances of the case, the order passed by Pr. CIT under section 263 of the Income Tax Act is unsustainable as power to revise can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. 5. In response to the show-cause notice, the assessee filed detailed submissions and submitted that he has taken term loan of Rs.4 Crores from State Bank of India in F.Y.2013-14 which was disbursed to him on 10/10/2013 and the same fund was transferred to partnership firm, M/s. Ritesh Exports on the next date i.e. 11/10/2013. He also submitted that during the course of assessment proceedings, specific question was raised by the AO and in response, the assessee had filed the entire details alongwith requisite documents before the AO alongwith copy of the ledger account of the firm as well as the ledger account of the statement of the term loan in the books of the assessee. The submissions of the assessee have been incorporated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin meaning of Section 57 of the Act and thus as discussed above the provisions of Section 263 are clearly attracted in this case and the contentions of the Assessee in this regard are rejected 6.1 During the course of Revision proceedings the assessee has submitted two interest Certificates from the SBI, Huges Road branch from of two different bank accounts showing that the assessee has paid interest totaling to Rs. 37,12,763/- against the loan borrowed of Rs.4,00,00,000/- along with Ledger account of State Bank of India for the FY 2016-17 and the assessee has also submitted the banks statement of F.Y. 2013-14 showing that he has borrowed loan of Rs.4,00,00,000/- and deposited the same to M/s. Ritesh Exports from which the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from M/s. Ritesh Exports. Hence, the nexus between the income earned of Rs. 46,50,899/- and interest expenses of Rs.37,16,200/- being claimed is still not established. Thus, the Assessing Officer is accordingly directed to confirm the payment of interest by Ritesh Exports and verify the nexus with income earned by considering the relevant documentary evidences and reframe the assessment. 6.2 In view of the above, the assessment order dated 06.12.2019 passed u/s. 143(3) of the Act, for AY 2017-18 is accordingly set aside for passing the order afresh considering the above direction, after giving the assessee an opportunity of being heard and producing any evidences in this regard. 6. Before us, ld. Counsel for the assessee apart from mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een duly verified and examined by the AO, the ld. PCIT could not have set aside the order to re-examine this issue once again. 7. On the other hand, the ld. CIT DR strongly relied upon the order of the ld. PCIT and submitted that the assessee could not establish the linkage between the loan taken from the SBI and utilization of loan carrying interest income and whether out of such interest income, assessee has paid the interest to the SBI. He further submitted that the term loan was for entirely different purpose and therefore, the ld. PCIT has rightly directed the AO to examine this issue. 8. We have heard the rival submissions and perused relevant finding given in the impugned order as well material referred to before us. The undisputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et Income 982,447 9. Further from the perusal of the audited balance sheet and profit and loss account of the firm M/s. Ritesh Exports as on 31/03/2017, it is noticed that the assessee has received interest on capital contribution of Rs. 17,60,000/- which has been shown separately. Apart from that, it has paid interest on loan taken from the assessee of Rs.46,23,842/-. The loan taken by the firm from the assessee, in turn was taken by the assessee from the SBI. Thus, the assessee received interest on loan given to the firm and on the same loan taken from the bank, the assessee has paid interest. Thus, there was direct nexus between earning of the interest income and interest paid. Accordingly, the netting of the net interest incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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