AI Drafter 
TaxTMI 
TaxTMI 
2022 (11) TMI 714
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....ainable in the eyes of law. 2. The facts relating to the case are stated in brief. The original assessment was completed by the Assessing Officer for the year under consideration u/s 143(3) of the Act on 26.12.2016. The ld. PCIT, on examination of assessment record, initiated revision proceedings u/s 263 of the Act on the reasoning that the assessment order so passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. The ld. PCIT initiated revision proceedings in respect of 4 issues. However, after hearing the assessee, the Ld PCIT accepted the explanations given by the assessee in respect of two issues. Accordingly, he proceeded to pass revision order in respect of following two issues (i) dis....
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....d money and thus has incurred unnecessary interest burden. Accordingly he took the view, the disallowance is required to be made out of the interest paid to GRUH Finance Ltd. Since the Assessing Officer has not examined this issue, the ld. PCIT took the view the same has rendered assessment order erroneous and prejudicial to the interest of the Revenue. Accordingly, he set aside the assessment order and directed the AO to pass order afresh, after giving opportunity of being heard to the assessee. The assessee is aggrieved by the revision order so passed by Ld PCIT and hence challenged the same by filing this appeal before the Tribunal. 5. The Ld A.R submitted that the interpretation given by Ld PCIT in respect of both the issues is not i....
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....red by Hon'ble Kerala High Court in the case of Beacon Projects P Ltd vs. CIT (2015)(377 ITR 237)(Ker) and also the decision rendered by Hon'ble Supreme Court in the case of Bikaram Singh (1977)(224 ITR 551)(SC). Accordingly, the Ld A.R submitted that the Ld PCIT was not right in holding that the assessee is liable to deduct tax at source u/s 194A of the Act from loan processing fee paid by it. 6. With regard to the second issue, the Ld A.R submitted that the assessee has availed loan from GRUH Finance Ltd @ 14.50% and it has charged interest @ 12% on the loan given to a related party. He submitted both transactions are independent transactions unconnected with each other. The assessee has contracted with GRUH Finance Ltd for paying inte....
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....prudent business principles. In any case, the AO has not examined both the issues and hence the Ld PCIT was justified in passing the impugned revision order. 8. We heard rival contentions and perused the record. The first issue is whether the Loan processing fee paid by the assessee would fall under the definition of interest given in sec.2(28A) of the Act or not. Sec. 2(28A) of the Act reads as under:- "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized." ....
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....harge". Hence it is possible to contend that the loan processing fee would fall under the category of "service fee or other charge". However, a careful perusal of the definition would show that the the said payments (service fee or other charge) should also be 'in respect of moneys borrowed or debt incurred'. Hence, any type of payment made after the borrowing of money or incurring of debt alone would be covered by the definition of sec.2(28A) of the Act. Hence, we are of the view that there is merit in the contentions of the Ld A.R that the loan processing fee cannot qualify as "interest" within the meaning of sec.2(28A) of the Act. In view of the decisions rendered by Hon'ble Kerala High Court and Hon'ble Supreme Court, referred supra, we....
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....to a related party. The Ld PCIT has also not cited any of the provisions of the Act, which would warrant such a disallowance. Hence, we do not find any rationale in the view taken by Ld PCIT in respect of this issue and hence the Ld PCIT was not justified in initiating revision proceedings in respect of this issue. 11. The Hon'ble Delhi High Court in the case of CIT vs. Nagesh Knitwears (P) Ltd (2012)(345 ITR 135) has held that the CIT should conduct necessary enquiries and come to the conclusion that the assessment order is erroneous and the view taken by the AO is unsustainable in law, i.e., the view expressed by Ld PCIT should be in accordance with law and then only, he could hold that the assessment order is erroneous. When the view ....