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The ITAT dismissed the revision under Section 263, holding that the AO's assessment order was neither erroneous nor prejudicial to the revenue. The AO conducted a detailed inquiry, including notices under Section 142(1), and appropriately deferred recognition of interest income due to uncertainties in collection from loans extended to subsidiaries. The assessee demonstrated sufficient own funds for such loans, and the interest charged was consistent with prior accepted rates for international transactions. The Tribunal emphasized that one of the essential conditions for invoking Section 263-error in the order prejudicial to revenue-was not met. Consequently, the AO's considered view on the interest addition stood affirmed, and the revision was quashed. The assessee's appeal was allowed.
The ITAT dismissed the revision under Section 263, holding that the AO's assessment order was neither erroneous nor prejudicial to the revenue. The AO conducted a detailed inquiry, including notices under Section 142(1), and appropriately deferred recognition of interest income due to uncertainties in collection from loans extended to subsidiaries. The assessee demonstrated sufficient own funds for such loans, and the interest charged was consistent with prior accepted rates for international transactions. The Tribunal emphasized that one of the essential conditions for invoking Section 263-error in the order prejudicial to revenue-was not met. Consequently, the AO's considered view on the interest addition stood affirmed, and the revision was quashed. The assessee's appeal was allowed.
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