TaxTMI 
TaxTMI 
2021 (1) TMI 396
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....ated 04.12.2015 is erroneous and prejudicial to the interest of revenue. The notice dated 23.03.2018 issued U/s. 263 of Act is not in accordance with the provisions of the Act and deserves to be quashed in toto 3. On appreciation of the facts and circumstances of the case and interpretation of law the learned PCIT has erred in setting aside the order of the Learned Assessing Officer U/s 143(3) r.w.s. 144A dated 04.12.2015 and directing the Learned Assessing Officer to frame the assessment order afresh. The order of the Learned PCIT U/s. 263 of the Act is contrary to facts of the case and law and deserves to be deleted in toto. 4. On appreciation of the facts and circumstances of the case the Learned PCIT has in passing the order U/s.263 without affording a reasonable opportunity of personal hearing. The order of the learned Principal Commissioner of Income Tax U/s.263 of the Act has been passed without following the principle of natural justice and deserves to be quashed in toto. 5. On appreciation of the facts and circumstances of the case, the order U/s.263 of the Act passed by the learned PCIT has not been served upon the appellant company within the t....
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.... allowed such interest expenditure. 4. It is in response to the show cause notice the assessee filed its reply dated 27th March 2018. In the reply the assessee besides the other contentions, contended that similar show cause notice dated 8th March 2016 was issued by learned PCIT for assessment year 2009-10 for revising the assessment order for assessment year 2009-10. The assessee challenged the show cause notice dated 8th March 2016, issued under section 263 for assessment year 2009-10 before Hon'ble Jurisdictional High Court. The said show cause notice has been set aside by Hon'ble High Court vide order dated 22nd August 2017 in Civil Appeal No.4036 of 2016. The assessee contended to drop the action initiated under section 263 of Income-tax Act. The contention of assessee was not accepted by learned PCIT. The learned PCIT has held that allowability of interest paid on the borrowing from the foreign banks for the purpose of investing in subsidiary company outside India is to be disallowed under section 36(1)(iii). The learned PCIT further concluded that investment have been made by assessee to promote its subsidiary company and not to earn any dividend income and that it is....
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....r 2009-10, since the order of Hon'ble Gujarat High Court attained finality, accordingly the grounds of appeal raised by assessee are directly covered in favour of assessee and against the revenue. 6. On the other hand the learned DR for the revenue supported the order of learned PC IT. The learned CIT-DR submits that interest expenses of Rs. 2.88 Crore to foreign banks have been incurred by the assessee in the form of payment of interest on borrowing from the foreign banks for the purpose of making investments in the share capital of subsidiary companies situated outside India. The assessee has wrongly claimed this amount as an item of expenditure under section 57(iii) and the assessing officer has wrongly allowed the same. Before learned PCIT, during the proceeding under section 263, the main contention of assessee was that issue has been decided in favour of assessee by the decision of Hon'ble Gujarat High Court for assessment year 2009-10. The learned PCIT after considering the said judgment of Hon'ble High Court has held that the only issue is the law applicable regarding allowability of interest paid on the borrowings utilized for promoting a subsidiary company. The issue i....
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....ment years. We have noted that on similar show cause notice, which was challenged by the assessee before High Court, in assessment year 2009-10, in Special Civil Appeal No.4036 of 2016 the High Court passed following order; "9. From the materials on record, it can be seen that regarding the interest and other finance charges of Rs. 2.36 Crore, the assessing officer had undertaken a detailed scrutiny during the assessment proceeding and called upon the assessee to justify the claim. The assessee's stand was twofold. Firstly, that interest related to the borrowed amount which was invested in the stock of subsidiary company set up in USA. This company was set up to increase the assessee's sale. The expenditure was thus exclusively for the purpose of business. In the alternative, the expenditure should be allowed under section 57(iii) of the Act since such investment would earn dividend income. Merely because no dividend was paid during the year under consideration would not be of any consequence. The assessing officer rejected the 1st contention but accepted the later. The assessee did not object to this proposal in the draft order supplied by the assessing officer. Consequen....
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.... disqualify for deduction only if no income result from such expenditure in a particular assessment year but if there is some income howsoever small or meagre, the expenditure would be eligible for deduction. In the opinion of the Supreme Court this would bring about an anomalous result. 10. It can thus be seen that the view adopted by the Assessing Officer was after proper scrutiny of the relevant facts and clearly a plausible view and therefore, not open to revision at the hands of Commissioner. The Supreme Court in case of Malabar industrial Co Ltd (supra), which has been referred to time and again, held and observed that the order of assessment would be open to revision provided to and condition of same being erroneous and prejudicial to the interest of revenue are satisfied. It is also well settled that if after proper enquiries, the assessing officer has adopted a view which is plausible one, the view would not be open to revision by the Commissioner." 9. We have further noted that similar show cause notice under section 263 was issued by learned PCIT for three subsequent assessment years. After the decision of Hon'ble Gujarat High Court in assessee's own case for....