TaxTMI 
TaxTMI 
2022 (4) TMI 393
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....pur) Ltd. in ITA No. 308/Nag/2016, wherein the impugned order has been assailed on the following grounds of appeal before us: "(1) That the notice and the order of the Learned Pr. Commissioner of Income Tax (Central), Nagpur passed u/s. 263 is bad in law and wrong on facts. On the facts and circumstances of the case, the assessment order passed by the AO u/s. 143(3) was neither erroneous nor prejudicial to the interest of the revenue and the notice u/s. 263 and the proceedings thereafter are illegal and liable to be quashed. (2) That the learned Pr. CIT erred in law and on facts in holding that the interest on unsecured loans Rs. 44,26,767/-, Brokerage charges on unsecured loans Rs. 75,656/- and processing charges of Rs. 5,44,412/- are not allowable. On the facts and circumstances of the case, the expenditure is incurred for the purpose of the business and the learned Pr. CIT erred in directing the AO to disallow such expenditure. (3) That the learned Pr. CIT erred in law and on facts in holding that the assessee has not done any real business and hence the AO should have rejected the claim of trading loss. On the facts and circumstances of the case the P....
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....ch were genuinely incurred to carry out its non-delivery transactions or paper transactions. Observing, that the assessee had in its Profit & loss account debited various expenses which were not be required to be incurred in the case of business involving paper transactions, the Assessing Officer decided to allow only those expenses which were genuinely incurred to carry out such non-delivery transactions or paper transactions. On the basis of his aforesaid deliberations the Assessing Officer called upon the assesee to substantiate the genuineness of the expenses and put forth an explanation as to why the allowability of its claim for deduction be not restricted to the expenses which were genuinely incurred to carry out paper transactions. After considering the reply of the assessee the Assessing Officer disallowed the following expenses: Particulars Amount (Rs.) Remarks Manufacturing expenses 1,92,713 Since there is no manufacturing required is paper transaction Consultancy charges 3,09,887 Since there is no consultancy work required in paper transactions Travelling expenses (Director) 1,57,126 Since there is no travelling required for paper tra....
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....imed by the assessee. Backed by his aforesaid observations the Pr. CIT called upon the assessee to explain that as to why the order passed by the Assessing Officer under Sec. 143(3), dated 03.03.2014 may not be revised u/s 263 of the Act. As the reply filed by the assessee did not find favor with the Pr. CIT, therefore, he vide his order passed u/s. 263 of the Act, dated 09.03.2016 held the assessment order passed by the Assessing Officer u/s. 143(3) of the Act, dated 03.03.2014 as erroneous in so far it was prejudicial to the interest of the revenue, and, set aside the same with a direction to him to pass a fresh order after affording a reasonable opportunity of being heard to the assessee. 5. The assessee being aggrieved with the order passed by the Pr. CIT u/s. 263 of the Act, dated 09.03.2016 has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As is discernible from the records, we find, that....
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.... transactions which were non-delivery based i.e. trading on spot delivery basis, had thus, for the said reason concluded that the assessee's claim for deduction of expenses were to be restricted only to those which were related to non-delivery transactions or paper transactions. 8. On the other hand, we find that the Pr. CIT had construed the paper transactions of the assessee as if no actual business was being carried out by it. In our considered view, not only the basis adopted by the Pr. CIT is found to be fallacious, but also, the same is not consistent with the past history of the assessee. As brought to our notice by the Ld. AR, the Assessing Officer while framing assessment in the assessee's own case for the immediately preceding year i.e, assessment year 2010-11, had observed, that the assessee's claim for deduction of the expenses was to be restricted to only those expenses which were related to non-delivery based transactions or paper transactions and had allowed those expenses which were genuinely incurred to carry out such transactions. It was submitted by the Ld. AR that the Assessing Officer on the basis of his aforesaid observations had therein allowed the assesse....
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....ing at length arrived at a plausible view i.e., allowing of the assessee's claim for deduction of expenses to the extent the same were genuinely incurred in the course of its coal trading transactions on a non-delivery basis. In sum and substance, the Assessing Officer had after due application of mind restricted the assessee's claim for deduction to only those expenses which were related to its non-delivery based transactions or paper transactions. Apart from that, the view so taken by the Assessing Officer is found to be in conformity with that taken in the assessee's own case for the assessment year 2010-11, which as observed by us hereinabove had been approved by the Tribunal vide its order passed in ITA No.201/NAG/2014 & CO No.24/NAG/2017, dated 29.03.2019. On the basis of our aforesaid observations, we have no hesitation to hold that the Pr.CIT had approached the issue in question absolutely on the basis of misconceived and incorrect facts i.e., by construing the term non-delivery based transactions or paper transactions as if no actual business was done by the assessee. Also, as observed by us hereinabove, the view taken by the Assessing Officer i.e, allowing of the assessee....