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TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1509
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....erroneous in so far as it is prejudicial to the interest of Revenue as the Assessing Officer has failed to examine/make enquiries on the following issues during the course of assessment proceedings: (i) Contribution to Pension Fund; (ii) Disallowance u/s. 14A of the Act; (iii) Depreciation in value of investment reduced while computing book profit u/s. 115JB of the Act; (iv) Interest on Non Performing Assets (NPA); (v) Deferred payment receipt of guarantee commission; (vi) Loss on sale of assets to Assets Reconstruction Company (ARC); and (vii) Interest paid on Perpetual Bonds. The assessee gave a detailed reply to the notice issued under section 263 of the Act meeting each and every reason for invoking revisional jurisdiction in respect of the issue mentioned above. The reply of the assessee dated 06/03/2020 is at page-6 to 118 of the Paper Book. The reasons given in reply were duly supported by the documentary evidences. Despite the fact that the Assessing Officer had carried out detailed enquiry during the course of assessment proceedings and the extensive reply given by the assessee to the show cause notice issued under section 263 of the Act, the PCIT passed the impugn....
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.... 14A r.w.r. 8D. The Assessing Officer after considering the same, made disallowance of Rs.24.59 Crores u/s.14A of the Act. Hence, the observations of the PCIT that the Assessing Officer has failed to examine the issue of disallowance u/s. 14A r.w.r. 8D is contrary to the facts and documents on record. (iii) Depreciation in Value of investments: The ld. Authorised Representative for the assessee submitted that in notice u/s. 263 of the Act, the PCIT has mentioned about depreciation in value of investment reduced while computing book profit u/s. 115JB, however, while passing the order u/s. 263 this issue was not taken up for adjudication. (iv) Interest on NPA: The ld. Authorised Representative for the assessee submitted that the issue with regard to interest on NPA was also enquired into by the Assessing Officer during assessment proceedings. He referred to the query made in this regard vide notice u/s. 142(1) of the Act at page 27 of the paper book and referred to the reply at page 38 of the paper book. The ld. Representative for the assessee submitted that this issue is squarely covered by the decision of Pune Bench of the Tribunal in the case of DCIT vs. Bank of Maharashtra repo....
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....er the head Borrowings. He further referred to Schedule -4 at page 53 of the paper book to substantiate his contention. 2.1. Finally, the ld. Authorised Representative for the assessee concluded his submissions assailing the finding of PCIT that it is not a case of lack of enquiry, infact, the findings of the PCIT are factually incorrect and contrary to the records. The Assessing Officer made enquiries in respect of all the issue raised by the PCIT except one i.e. deferred payment guarantee commission. The ld. Authorised Representative for the assessee contended that where enquiries have been made and the Assessing Officer having examined the issue has taken a conscious call in accepting the submissions of the assessee and the view taken by the Assessing Officer is one of the possible view supported by judicial precedents, the assessment order cannot be held to be erroneous. The ld. Authorised Representative for the assessee in support of his submissions placed reliance on the following decisions: (i) CIT vs. Neerav Modi, 390 ITR 292; (ii) CIT vs. Sunbeam Auto Ltd., 189 Taxaman 436 (Del); (iii) Shruti Rahul Mane vs. PCIT, 2019(7) TMI 79 - ITAT Pune. 3. On the other hand, Shri ....
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....eplies of the assessee and also suo-motu disallowance made by the assessee, the Assessing Officer enhanced disallowance u/s. 14A of the Act by Rs.24,50,86,581/-. Therefore, it cannot be said that the Assessing Officer has made no enquiries on this issue. The findings of the PCIT on this issue are contrary to facts and documents on record. (iii) Depreciation in value of investments: The PCIT while passing the impugned order has not touched this issue. (iv) Interest on NPA: We find this issue was also examined by the Assessing Officer during assessment proceedings. The Assessing Officer vide notice dated 19/12/2017 raised a query. The same was answered by the assessee vide its reply dated 22/12/2017. The assessee had given a specific reply that interest income is offered to tax on accrual basis in line with Rule 6EA of the Income Tax Rules. We further find that the Hon'ble Apex Court in the case of CIT vs. Vasisth Chya Vyapar Ltd. (supra) has held that NPA on which no interest was received and possibility of recovery was almost nil, it could not be treated to have been accrued in favour of assessee and was therefore not exigible to tax. This issue was also considered by Pune Bench ....
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....ry to the facts. (vii) Interest on Perpetual Bonds: In the notice u/s 263 the PCIT pointed that interest amount is not shown in the Balance Sheet as debit or borrowings. The PCIT in the impugned order further observed that the assessee has not made any submission with regard to interest paid on perpetual bonds. The ld. Authorised Representative for the assessee has pointed that a specific query was raised by the Assessing Officer vide notice dated 16/11/2017 (supra). After examining the notice dated 16/11/2017, we find that the Assessing Officer had made enquiry about details of interest expenses. The assessee in submissions before the PCIT has categorically stated that the interest paid on bonds is debited to Profit & Loss Account. The assessee has substantiated that Bonds are reflected in the Balance Sheet under the head Borrowings. The details of the borrowings are given in Schedule-4 to the Balance Sheet. The assessee in an unequivocal manner had stated before the PCIT that interest paid on bonds is wholly and exclusively for the purpose of business and allowable as deduction u/s. 36(1)(iii) or Sec. 37 of the Act. It is relevant to note that the assessee is a nationalised Bank....