TaxTMI 
TaxTMI 
2018 (4) TMI 1207
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...., New Delhi u/s. 263 of the Act. For the sake of convenience, we first deal with ITA No. 2697/Del/2007. 2. The grounds raised in ITA No. 2697/DEL/2007 read as under:- 1. That on the facts and in the circumstances of the case and in law, the impugned order under section 263 of the Act is beyond jurisdiction, bad in law and void ab-initio. 2. That on the facts and in the circumstances of the case and in law, the Ld. CIT erred in alleging that the assessment order u/s. 143(3) of the Act was erroneous in allowing deduction of Rs. 11.15 crore debited to Profit and Loss account towards 'Provision and write off for non-performing assets.'. 2.1 That on the facts and in the circumstances of the case the Ld. CIT erred in not appreciating that the amount of provisions of non-performing assets had already been duly added back in the computation of income and thus there was no claim which had been allowed to the assessee in contravention of section 37 of the Act. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in alleging that the assessment order u/s. 143(3) of the Act was erroneous in allowing deduction of Rs. 1....
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.... assessee company had claimed loss of Rs. 2,28,35,593/- incurred on account of "cross currency swap" which was not allowable expenditure. Accordingly, having afforded due opportunity to the assessee company, the CIT-IV, Delhi vide his Order dated 22 March, 2007 passed under Section 263 of the Act, held that the original assessment order dated 30 March, 2005 under Section 143(3) of the Act for the Assessment Year 2002-03 to be erroneous and prejudicial to the interest of the Revenue because: (a) Deduction of Rs. 1114.68 lacs was wrongly allowed in respect of provisions for nonperforming assets, even though it was a mere contingent liability; (b) Deduction of Rs. 114.06 lacs towards loss of interest rate swap was incorrectly allowed. In the Impugned Order, the Ld. Commissioner of Income Tax-IV, Delhi held that the AO had not examined the aforesaid two issues properly and, therefore, set aside the issues for further inquiries to be conducted by the AO. 5. Against the aforesaid order of the Ld. CIT-IV, New Delhi passed u/s. 263 of the Act dated 22.3.2007, assessee is in appeal before the Tribunal. 6. Ld. Counsel of the assessee has stated Ld. CITIV, New Delhi ha....
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....d. (2012) 343 ITR 329 and the decision of the Coordinate Bench of the Tribunal in the case of its group company in GE Financial Services Ltd. in ITA No. 1941 of 2008 and 2123 of 2009. 7. On the other hand, Ld. CIT(DR) controverted the various submissions and arguments advanced by the Ld. AR of the Assessee. He has strongly relied upon the impugned Order passed u/s. 263 of the Act by the Ld. CIT and has invited our attention to the finding recorded by the learned CIT in his impugned order. Accordingly, he stated that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue. Accordingly, he requested that the impugned order passed u/s. 263 of the Act passed by the Ld. CIT may be upheld and appeal of the assessee may be dismissed. 8. We have carefully considered the rival submissions and perused the relevant records available with us, especially the impugned order passed by the Ld. CIT u/s. 263 of the Act alongwith the legal position on the relevant issue which emanates from the various decisions cited before us; Questionnaire issued by the AO and the assessee's relies thereof attached with the Paper Book-I at pages 1 to 98. We note that asse....
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.... that out of total provision of Rs. 1114.68 lacs, a sum of Rs. 7,60,76,105/- was suo moto added back in the computation of income and a further sum of Rs. 73,46,160- was disallowed by the AO in the original assessment order dated 30.3.2005. Therefore, out of Rs. 1114.68 lacs, Rs. 834.22 lacs already stood disallowed in the original assessment order. The balance amount represented actual write off which was palpably clear from page 2 of the impugned order itself. No deduction on account of any such provision was, therefore, allowed to the assessee. Hence, there is no error or prejudice to the interest of revenue. As regards second issue it was noted that interest rate swap was an actual loss and only the net loss of Rs. 114.05 lacs after setting of gain of interest rate swap was claimed as deduction. However, we find that both these issues were duly examined by the AO vide Questionnaire dated 2.11.2004 (Page 1-2 of the Paper Book) to which replies dated 9.12.2004, 20.12.2004 and 6.1.2005 (Page No. 3-39 of Paper Book-I) were furnished and, therefore, the finding of the Ld. CIT that the issues were not examined properly was not correct. Even the Ld. CIT has not pointed out the definit....
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....er book. We have perused the same. 8.3. After considering these submissions of the assessee in response to the query which included, party wise details of loss incurred on sale of repossessed assets, the A.O. accepted the claim of the assessee. Similarly for the A.Y. 2003-04 a query was raised by the A.O. and after considering the details furnished and the submissions, the claim was accepted. The question before us is, whether under such circumstances the Ld.CIT can invoke his powers u/s 263 of the Act when this is not a case of lack of enquiry but merely a case of inadequate enquiry as per the Ld.CIT. 8.4. The Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. (supra) has held as follows. Held, dismissing the appeal, : (i) That the AO allowed the claim on being satisfied with the explanation of the assessee. Such decision of the A.O. could not be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. The AO had called for explanation on the very item from the assessee and the assessee had furnished its explanation. This fact was conceded by the Commissioner himself in his order. Th....
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.... "Held, that the Commissioner had mentioned that the A.O. had not examined the cash credits of the partners or deposits of chit fund. Assuming this to be so, this might make the order erroneous, but how it was prejudicial to the interest of the Revenue had not been stated by the Ld.CIT as he did not deal with the explanation given by the assessee in the course of S.263 proceedings. The Commissioner observed in his order that the assessee had not filed certain documents on the record at the time of assessment. Assuming this was so it did not justify the conclusion arrived at by the Commissioner that the AO had shirked his responsibility of examining and investigation of the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the Commissioner, and this was duly reflected in the respective assessments of the partners who were income tax assesses and the unsecured loan taken from the chit fund was duly reflected in the assessment order of the chit fund which was also an assessee. The order of revision was not valid." 8.7. Applying the propositions laid down in the above ju....
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....see's submissions and details by the A.O. was not warranted, either in law or on facts. The Ld.CIT has not given any material or evidence which would contradict the assessee's version and which aspect has not been adverted to by the A.O. while completing the assessment. For all these reasons we allow both these appeals by the assessee for the A.Y. 2003-04 and A.Y. 2004-05, by holding that the Ld.CIT has erroneously invoked his powers u/s 263 of the Act. 10.2. Coming to the A.Y. 2002-03, admittedly there is lack of enquiry on the part of the A.O. In the S.263 proceedings, the Ld.CIT has come to a definite conclusion that the loss in question is a business loss. This does not mean that the lack of enquiry by the A.O. would not be considered as erroneous and prejudicial assessment order passed by the A.O. The A.O. has not verified either (a) the allowability of the loss in principle or (b) where the claim is factually correct as quantification of the loss has not been verified by the A.O. In our opinion such exercise of powers u/s 263 of the Act is in accordance with law. Just because the Ld.CIT has come to a conclusion that in principle the loss in question is a business los....