AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 629
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..... Brief facts of the case are that the assessee company filed its return of income for the assessment year 2018-19 on 30.11.2018 admitting income of Rs.. NIL. The case was selected for limited scrutiny to examine (i) investments/advances/loans, (ii) Ind-AS compliance and adjustment, (iii) business loss & (iv) expenses incurred for earning exempt income and the assessment was completed under section 143(3) r.w.s. 144B of the Act dated 14.07.2021. 3. Subsequently, the ld. PCIT, while exercising the powers conferred under section 263 of the Act, noted from the assessment records that the assessee had claimed interest expense upto the rate of 23% and total interest expense is Rs..26.30 crores. But, the assessee has not charged/earned any inter....
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....e assessee are reproduced as under: B) Disallowance of proportionate interest - Rs. 9,58,35,029/-: In the show cause notice issued, it is proposed to disallow proportionate claim of interest expenses amounting to Rs. 9,58,35,029/- on the ground that the assessee has made interest free advances to the following related entities out of the interest bearing funds: (1) Anarnalais Bus Transport P Ltd (PAN: AAACU3310N) Rs. 41,66,39,600)/- (2) ABT (Madurai) P Ltd (PAN: AADCA6354K) Rs. 3,44,405/- TOTAL Rs. 41,66,74,040/- In this regard, it is submitted that the interest bearing funds obtained during the AY 2017-18 was neither diverted to M/s Anamalais Bus Transport P Ltd nor to M/s ABT (Madurai) P Ltd and the above amount of Rs. 41....
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....risdiction assumed u/s 263 of the Act to question the acceptance of the explanation offered by the Assessee in the scrutiny assessment proceedings and reviewing the scrutiny assessment order on this aspect is completely ruled out and outside the powers vested in section 263 of the Act. Further, there is a factual error committed in the captioned notice and in this regard, it is proposed to revise the assessment order on the ground that the Assessee has not established during the assessment proceedings on the diversion of the interest free funds or own funds while however, the stand taken the Assessee in the original scrutiny assessment was completely different inasmuch as the amount reflecting against M/s Anamalais Bus Transport P Ltd Rs....
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....s silent on the very same issue on which the Assessing Officer raised the query in the draft assessment order passed on 19.04.2021, by noting adjudicating on the merits of the issue and omission of the issue which is part of the draft assessment order, is clearly an erroneous assessment order and accordingly, the ld. PCIT, set aside the assessment order and directed the Assessing Officer to redo the assessment. 4. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that during the course of assessment proceedings, the Assessing Officer has very well proposed a draft assessment order incorporated the issue of interest payment and the ld. PCIT has also agreed that the issue of int....
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....ved at para 6 of page 6 that the issue of interest payment was very much part of the scrutiny assessment proceedings and to this effect, the arguments of the assessee in the present proceeding is correct. 6.1 In case the assessee has not furnished any detailed convincing reply against the additions proposed in the draft assessment order, definitely, the said addition would have been reflected in the final assessment order. Once the Assessing Officer has received reply of the assessee against the additions proposed in the draft assessment order, after examining the details furnished by the assessee and by accepting the same, the Assessing Officer dropped the additions proposed in the draft assessment order while concluding the final assessm....