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TMI Blog2022 (12) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 20011-12, the only effective issue to be decided is as to whether the ld. PCIT was justified in assuming revisionary jurisdiction u/s. 263 of the Act in the facts and circumstances of the case. The grounds raised by the assessee challenged the validity of assumption of jurisdiction u/s. 263 by the ld. PCIT as well as adjudication of the issue on merits. 3. We have heard rival submissions and perused the materials available on record. The return of income for the A.Y. 2011-12 was filed by the assessee on 30/11/2011 declaring total income of Rs. 8501,32,75,637/- under normal provisions of the Act. The final assessment was completed pursuant to the directions of the ld. Dispute Resolution Panel (DRP) on 25/01/2016 vide order u/s. 143(3) r.w.s. 144C(13) of the Act determining total income at Rs. 9302,36,17,248/- under normal provisions of the Act. The ld. AO in the said final assessment order had observed that since the tax computed under normal provisions of the Act is more than the tax computed u/s. 115JB of the Act, the income is finally determined under normal provisions of the Act as the assessed income. This final assessment order fram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on such capital is not deductible 4. The Hon'ble DRP has sustained an identical disallowance in the case of the assessee for A.Y. 2013-14. (ii) In view of the aforesaid facts and provisions of the Act, the Assessing Officer was required to examine and disallow the aforesaid claims of reduction from taxable income. However, no such examination or disallowance was made. The failure of the Assessing Officer to make the enquiries which were warranted in the facts and circumstances of the case and under the provisions of law and failure to disallow the aforesaid claims of reduction has rendered the assessment order dt 25.01.2016 erroneous in so far it is prejudicial to the interest of revenue." 3.1. The assessee filed its written submissions in response to the show cause notice stating that the ld. PCIT could invoke revision jurisdiction u/s. 263 of the Act only if the order has been passed by the subordinate authority i.e. the Assessing Officer. In the instant case, the final assessment order dated 25/01/2016 was passed pursuant to the directions of the ld. DRP which comprised of collegium of three Senior Officers in the rank of Commissioner of Income Tax. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the matter examined by DRP against Draft Assessment Order of the AO along with objections of the Assessee. Therefore, the contention of the petitioner that respondent does not have power to invoke Section 263 of the Act insofar as examination of Final Assessment Order along with Assessee's objection pursuant to the DRP decision, is untenable. No-doubt DRP panel consists of three Commissioners and Principal Commissioner examining or sitting over decision of the DRP may not be appropriate. At the same time, one cannot lose sight off, of a statutory provision like Section 263 of Act 1961, unless and until Section 263 of Act 1961 prohibits to examine the Final Assessment order, pursuant to the DRP decision. One cannot go beyond the statutory provision and so also 'read' or 'add' words by the Courts while interpreting a statutory provision. Time and again, Supreme Court and other Courts have held that in a matter of interpretation of statutory provisions, Court cannot 'add any words or sentence'. Even if there is any ambiguity, at the best Court can read down or struck down such statutory provision. In the present case, reading of Section 263 of Act 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 11.50% per annum for first 10 years. PNCDs are perpetual in nature with no maturity or redemption and are callable only at the option of the Company. The Company can exercise a call option to redeem the PNCDs at par only at the end of 10 years from the date of allotment of PNCD and at the end of every year thereafter. 2. The company has incurred various expenses amounting to Rs. 24,85,25,000/-, in connection with the PNDC. The details of the same are attached in 'Annexure A'. 3. The term Debenture has been defined in the section 2(12) of the Companies Act, 1956 as "debenture" includes debenture stock, bonds and any other securities of the company, whether constituting a charge on the assets of the company or not." As per the Oxford English Dictionary, Second Edition, 'A bond issued by a corporation or company (under seal), in which acknowledgement is made that the corporation or company is indebted to a particular person or to the holder in a specified sum of money on which interest is to be paid until repayment of principal. Further, the meaning of 'Bond' as per the concise Oxford English Dictionary, Ninth Edition is 'A certificate issued by a gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following decisions in support of its claim of deduction of issue expenses and interest as revenue expenditure before the ld. AO:- (a) Decision of the Hon'ble Supreme Court in the case of India Cements Ltd. vs. CIT reported in 60 ITR 52. (b) Decision of the Hon'ble Rajasthan High Court in the case of CIT vs. Secure Meters Ltd reported in 221 CTR 405 (Raj) (c) Decision of the Hon'ble Jurisdictional High Court in the case of Premier Automobiles Ltd vs. CIT reported in 80 ITR 415 4.4. Based on the aforesaid factual submissions and judicial precedents, the assessee concluded that the expenses of Rs. 24,85,25,000/- incurred on the issue of PNCDs i.e. Hybrid Securities are Revenue in nature allowable as business expenses. The assessee also gave the details of issue expenses as under:- 4.5. The assessee also enclosed the relevant portion of the Information Memorandum for issue of Unsecured, Subordinated Perpetual listed rated Hybrid Securities in the form of Non-Convertible Debentures on Private Placement Basis containing the terms and conditions of the issue together with the details of utilisation thereon before the ld. AO. This is enclosed in pages 7 & 8 of the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was framed by the ld. AO "without making enquiries". This proves the complete shifting of stand by the ld. PCIT from "No Enquiry" to "Inadequate Enquiry" and to "No Enquiry". Finally in para 7.6 of his order, the ld. PCIT concludes that "full enquiry" was not made by the ld. AO. This categorically goes to prove that nonapplication of mind by the ld. PCIT. The law is very well settled that revision jurisdiction u/s. 263 of the Act could be invoked only when there is "lack of enquiry" and not when there is "inadequate enquiry". However, in the instant case before us, it is not a case of "inadequate enquiry" by the ld. AO. In fact, the ld. AO had enquired the matter in full and had taken to its logical conclusion while framing the assessment. Hence, the provisions of Explanation 2 to Section 263 of the Act which came into effect from A.Y. 2015-16 also would not be applicable in the instant case. Moreover, we find that Explanation 2 to Section 263 of the Act was never sought to be used by the ld. PCIT in the show-cause notice issued to the assessee. This was used for the first time only in the revision order passed u/s. 263 of the Act. The ld. DR also argued before us th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowings with interest had also been duly notified by the assessee to BSE Ltd. and NSE Ltd as per the requirement of SEBI regulations. For the sake of convenience, the intimation given to BSE and NSE are reproduced hereunder: 4.8. This categorically goes to prove that it is not a case of equity and the issue of perpetual bonds is only borrowing made by the assessee. Since the said borrowing has been used for business purposes of the assessee, the interest paid thereon would be squarely allowable as deduction u/s. 36(1)(iii) of the Act. Hence, even on merits, the action of the ld. PCIT would have no legs to stand. 5. We further find that similar issue was subject matter of adjudication by this Tribunal in the context of section 263 proceedings itself by the ld. PCIT in the case of Tata Power Company Ltd., in ITA Nos. 2710, 2711/Mum/2018 and 6720 & 7608/Mum/2019 for A.Yrs. 2012-13 and 2013-14 respectively dated 25/04/2022. This Tribunal had adjudicated the exactly identical facts and had quashed the revision proceedings u/s. 263 of the Act. The relevant operative portion of the said order is reproduced hereunder:- 5. Heard both the sides and perused the material on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned that utilization of funds to be raised through this private placement will be for general business purpose and at page No. 62 issue size was mentioned of 15000 debentures of face value of Rs 10 lac each aggregating to Rs. 1500 crores. It is demonstrated from the detailed submission and copies of documents placed in the paper book that assessing officer has made detailed inquiry/verification during the course of assessment proceedings that assessee has borrowed funds for business use by issue of debentures. The borrowed fund were payable on call option exercising by company after the 10th year or any at the end of every year thereafter. It was also explained that the lenders were not entitled to share any surplus or bear any loss like shareholders. Debentures trustee were appointed to safeguard Interest of the lenders. The assessee company had also stated on the basis of aforesaid discussion that it had borrowed fund for the purpose of its business and the interest on debenture was deductible in computing the income from profit and gains from business and profession. In the light of the above facts and after considering the detailed material furnished by the assessee during th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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