AI Drafter 
TaxTMI 
TaxTMI 
2021 (9) TMI 402
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....ctor on which interest is paid and amount given to Oswal Cables Pvt. Ltd. on which interest is received was in earlier years and not in the year under consideration. (b) The AO has examined this issue in detail by issue of notice u/s 143(2) dt. 03.07.2017 in as much as the case of assessee was selected for limited scrutiny to examine this issue only and therefore, section 263 cannot be invoked merely because the CIT entertained a different opinion than that of AO. 3. The appellant craves to alter, amend and modify any ground of appeal. 4. Necessary cost be awarded to the assessee." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. The brief facts of the case are that the assessee is Director of M/s Oswal Cables Pvt. Ltd. Return of income was filed on 27/07/2016 declaring total income of Rs. 9,93,060/-. The case of assessee was selected for limited scrutiny under CASS. Mandatory notices were issued and served upon the assessee. The AO after making discussion and examination, accepted the income returned by the assessee vide order u/s 143(3) of the Income Tax Act, 1961 (in ....
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....e following cases:- i. CIT Vs. E.I.D. Parry Ltd. (1995) 216 ITR 489 (Mad.) (HC) ii. Berger Paints India Ltd. Vs. ACIT & Ors. (2010) 322 ITR 369 (Cal.) (HC) iii. Sterilite Industries (India) Ltd. Vs. ACIT & Anr. (2011) 79 CCH 453 (Mad.) (HC) iv. Anil Gupta Vs. Assessing Officer (2005) 96 TTJ 798 (Del.) (Trib.) v. Sushil Kumar Jain Vs. ACIT 2016 ITL 3825 (Del.) (Trib.) 3. It may be noted that notice u/s 263 (PB 24-25) was issued for the reason that AO has accepted the explanation of assessee without examining the issue in totality as there are no details about total income declared by M/s Oswal Cables Pvt. Ltd. and M/s Oswal Electrical Conductors and details of shareholders of M/s Oswal Cables Pvt. Ltd. and partner of M/s Oswal Electrical Conductors on record. Though these details are not relevant for the purpose of assessment of the assessee, it has been clarified before the AO that assessee is director of M/s Oswal Cables Pvt. Ltd., M/s Oswal Electrical Conductors is one of its group concerns and the details of directors & shareholders of M/s Oswal Cables Pvt. Ltd. was provided (PB 13). Therefore, it was incorrect on the part of....
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....ther held that no businessman can be compelled to maximize his profit and that the income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. In view of above, order passed by Ld. CIT u/s 263 is illegal & bad in law and the same be quashed." 6. On the other hand, the ld PCIT-DR has vehemently supported the order of the PCIT. 7. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. As per the facts of the present case, we observed that the assessee is a director in M/s Oswal Cables Pvt. Ltd. He filed his return of income on 27.07.2016 showing income from salary at Rs. 24 lacs, income from other sources at (Rs. 12,56,942/-) and after claiming deduction u/s 80C at Rs. 1,50,000/-, total income was shown at Rs. 9,93,060/-. The case of assessee was selected for limited scru....
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....uctors, details of shareholders of M/s Oswal Cables Pvt. Ltd. and partner of M/s Oswal Electrical Conductors on record. Hence, the order passed by AO was prejudicial to the interest of revenue. The Ld. PCIT, however, held that the order passed by AO is erroneous in so far as it is prejudicial to the interest of revenue and therefore, set aside the order by giving the following findings:- (a)The amounts were borrowed from the firm prior to 01.04.2015 and against which the loan was given to the said company prior to 01.04.2015. There is no balance sheet on record and there is no bank statement of the assessee of the relevant period and therefore, direct nexus of amount borrowed from the firm with the amount advance to the company is not evident. Even presuming so, interest expenditure u/s 57 of the Act is allowable if it is expended wholly and exclusively for the purpose of making or earning such income. (b)It is submitted by A/R that since Oswal Cables Pvt. Ltd. can accept loan from Director only, hence, the loan has been provided by the assessee being a Director. In this regard if a loan is given by a Director, he is also required to furnish a declaration as per C....
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..... 1,98,52,219/- as on 01.04.2015 and during the year further amounts aggregating to Rs. 24,14,000/- were advanced and there were repayments from the said company aggregating to Rs. 47,25,000/-. After crediting interest of Rs. 17,46,777/- the closing balance of the account is shown at Rs. 1,91,13,318/-. The ledger of Oswal Electrical Conductor shows that the opening credit balance of the said firm was at Rs. 1,92,17,242/- as on 01.04.2015 which after re-payment of Rs. 19,00,000/- & other credit entries of interest etc. closing balance is increased to Rs. 2,03,57,717/-. It thus appears that the amounts were borrowed from the firm prior to 01.04.2015 and against which the loan was given to the said company prior to 01.04.2015. There is no balance sheet on record and there is no Bank statement of the assessee of the relevant period and therefore direct nexus of amount borrowed from the firm with the amount advance to the company is not evident. Even presuming so, interest expenditure u/s 57 of the Act is allowable if it is expended wholly and exclusively for the purpose of making or earning such income. It is submitted by the AR that since Oswal Cables Pvt. Ltd. can accept loan from Di....
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....lectrical Conductor @ 16% amounting to Rs. 30,08,138/-. Thus net loss of Rs. 12,56,942/- has been declared under the head income from other sources. The said loss has been set off against salary income and total income is declared after claiming deduction under Chapter VIA at Rs. 9,93,060/-. It is seen from the ledger account of Oswal Cables Pvt. Ltd. that the amount advanced to the said company by the assessee is appearing as opening balance of Rs. 1,98,52,219/- as on 01.04.2015 and during the year further amounts aggregating to Rs. 24,14,000/- were advanced and there were repayments from the said company aggregating to Rs. 47,25,000/-. After crediting interest of Rs. 17,46,777/- the closing balance of the account is shown at Rs. 1,91,13,318/-. The ledger of Oswal Electrical Conductor shows that the opening credit balance of the said firm was at Rs. 1,92,17,242/- as on 01.04.2015 which after re-payment of Rs. 19,00,000/- and other credit entries of interest etc. closing balance is increased to Rs. 2,03,57,717/-. It thus appears that the amounts were borrowed from the firm prior to 01.04.2015 and against which the loan was given to the said company prior to 01.04.2015. There is no ....