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of <h1>Tribunal Supports Appellant: AO's Order Upheld and CIT's Use of Revisional Jurisdiction Dismissed for AY 2020-21.</h1> <h3>M/s. Ramesh Flowers Pvt. Ltd. Versus ITO (International Taxation), Tuticorin</h3> The Tribunal ruled in favor of the appellant, determining that the AO's order under sections 201(1) and 201(1A) for AY 2020-21 was not erroneous. ... Revision u/s 263 - TDS u/s 195 OR 194LC - loan was in the nature of External commercial borrowings (ECB) - HELD THAT:- As gathered that the assessee was subjected to TDS inspection and demand was raised u/s 201(1) / (1A) in terms of Sec.194LC and 195. It could be seen that no tax was deducted by the assessee and demand was raised by Ld. AO in terms of statutory provisions after examining the relevant documents including terms of ECB. The same would lead to a conclusion that Ld. AO had applied its mind that the provisions of Sec.194LC would apply to the case of the assessee and TDS would be required at rates mentioned therein. There was complete application of mind on the issue and the same was one of the possible views since as rightly argued by Ld. AR, foreign borrowings would always come in foreign currency notwithstanding the fact that in the relevant contracts, the terms of loan has been denominated in Indian Rupees. Nevertheless, the matter was duly examined by Ld. AO while finalizing the order and a plausible view was taken in the matter. This being so, the order could not be termed as erroneous and therefore, the impugned revision could not be sustained in law. Appeal stand allowed. Issues Involved:Validity of revisional jurisdiction u/s 263 by CIT against AO's order u/s. 201(1) / 201(1A) for AY 2020-21.Detailed Analysis:1. The appellant contested the validity of the revisional jurisdiction exercised by the CIT under section 263 against the AO's order for the assessment year 2020-21. The appellant raised various grounds challenging the CIT's order, including that the AO had already examined the relevant facts and concluded that the assessee complied with the ECB guidelines, making the invocation of section 263 jurisdiction unwarranted.2. The CIT contended that the loan should have been availed in foreign currency to qualify for the concessional tax rate under section 194LC. The CIT relied on statutory provisions and argued that Indian currency loans do not fulfill the conditions prescribed under section 194LC. The CIT directed the AO to pass a fresh order after considering the matter in accordance with law, including the terms of DTAA.3. The Tribunal found that the AO had applied its mind while raising the demand under sections 201(1) / (1A) based on the inspection and relevant documents. The Tribunal noted that the AO had considered the provisions of section 194LC and had taken a plausible view on the issue. The Tribunal concluded that the AO's order was not erroneous, and therefore, the revision under section 263 could not be sustained. The appeal was allowed in favor of the appellant.This detailed analysis covers the issues involved in the legal judgment regarding the validity of revisional jurisdiction under section 263 by the CIT against the AO's order for the assessment year 2020-21.
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