TaxTMI 
TaxTMI 
2025 (4) TMI 1557
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....he instant case. 3. We have heard the rival submissions and perused the materials available on record. The assessee company is a Non-Banking Finance Company (NBFC) and had filed its original return of income u/s 139(1) of the Act for AY 2018-19 on 29.09.2018. It had filed revised return on 29.03.2019 declaring loss of Rs. 10,68,63,896/-. The case of the assessee was selected for complete scrutiny to examine the following issues:- i. Claim of Any Other Amount Allowable as Deduction in Schedule BP ii. Depreciation Claim iii. Investments/Advances/Loans iv. Refund Claim v. Business Loss vi. ICDS Compliance and adjustment vii. Expenses Incurred for Earning Exempt Income viii. Other Income Reported in Schedule A-OI not Credited to P&L Account 4. The assessment was completed u/s 143(3) read with Section 144B of the Act dated 15.09.2021 determining the total loss of Rs. 10,29,20,424/- after making an addition of Rs. 39,43,471/- on account of employees contribution towards PF and ESI which was remitted beyond the due date prescribed under the respective acts. This assessment was sought to be revised by the ld PCIT....
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....tered with Reserve Bank of India (RBI). The assessee is engaged in the business of commercial, consumer and MSME lending. Hence, obviously the main business of the assessee would be financing wherein the assessee would be deriving interest income on amount advanced as loan. The amount of loan would be advanced out of own funds or out of borrowed funds. Whenever the funds are borrowed, obviously the assessee would be paying the interest thereon. Hence, interest expenditure per se / finance cost becomes a raw material for the assessee being the finance company. On perusal of the 79 pages order of the ld PCIT passed u/s 263 of the Act, we do not find on any of the issues, the ld PCIT had whispered as to either no enquiries were made by the ld AO or the order of the ld AO is erroneous due to a particular fact not being examined by him. In our considered opinion, the ld PCIT had merely directed the ld AO to make fishing and roving enquiries on the details which are already placed on record either in the form of explanation given by the assessee or in the various notes on account disclosed in the financial statements or in the auditors" report enclosed in the financial statements. This f....
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....ld PCIT to be examined by the ld AO falls within the ambit of "making order of the ld AO erroneous". 10. Legal and Professional charges, loan origination cost and DSA cost 10.1 During the course of original assessment proceedings, a notice u/s 142(1) of the Act dated 22.03.2021 was issued to the assessee wherein specific enquiry was raised vide question No. 1 with regard to loan origination cost, details of other expenses of Rs. 43.11 crores which included legal and professional expenses at Rs. 15.19 crores vide Question No. 6 thereon. The assessee filed its reply on 07.04.2021 which was enclosed in pages 57-61 of the Paper Book. The assessee explained that legal and professional charges includes the payment made on account of services obtained from the various professional consultants, tax consultants, IT professionals and auditors, legal professionals etc. Further, these includes expenses incurred for obtaining IT consultants and outsourcing of manpower for support in various operations and other services. 10.2. With regard to loan origination cost, the assessee submitted that it incurred origination fee related for corporate deals / referred/ sourced through Clix Financ....
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.... agreement/ contract with Clix Finance India Ltd was called along with the justification of debiting loan origination cost of Rs. 15.19 crores against the interest income of loans and advances. The assessee in response to the said notice vide reply dated 07.04.2021 furnished the copy of agreement entered into between the assessee and Clix India Finance Ltd which is enclosed in Pages 232 to 238 of the Paper Book; copy of invoice wise details of top 10 Direct Selling Agents (DSA) which are enclosed in pages 239 to 244 of the Paper Book along with copy of sample agreement with DSAs together with copy of invoice sample basis which are enclosed in pages 245 to 287 of the Paper Book. 10.3. All these facts clearly proved that more than adequate enquires have been made by the ld AO with regard to legal and professional charges and loan origination cost in the assessment proceedings itself. Hence, it cannot be said by any stretch of imagination that adequate enquiries were not made by the ld AO. This is not the case of no enquiry by the ld AO qua the impugned issue. The ld PCIT had merely directed the ld AO to examine the allowability of the same u/s 37 of the Act in the light of the obs....
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....ove schedules for the year aggregates Rs 791 (previous year Rs 542)." 11.1 The ld AO issued notice u/s 142(1) of the Act dated 24.12.2020 where specific query was raised vide question No. 8 for justification of allowability of sum of Rs. 49,69,73,707/- reflected in any other amount allowable as deduction in column 33 of schedule BP of the ITR. In response to the same, the assessee vide reply dated 08.01.2021 filed the complete break up amounting to Rs. 49.69 crores including the nature of expenses and justification for allowability of the said expenses with supporting documents which are enclosed in pages 184-191 of the Paper Book and pages 217 to 222 of the Paper Book. Further another notice was issued u/s 142(1) of the Act on 22.03.2021 by the ld AO specifically asking for details of other expenses of Rs. 43.11 crores vide question No. 6. The assessee furnished the reply dated 07.04.2021 giving the details of various expenses in a tabular form explaining the nature and the amount incurred under the respective head. The assessee also submitted that the revenue had increased three fold during the year from its business operations whereas the expenditure had increased only less t....
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.... earlier part of this order, the assessee being a NBFC engaged in the business of financing, would have to incur finance cost on its borrowing and accordingly, the financing cost becomes raw material for the finance company. The raw material cost can never be doubted unless it is incurred outside the books or sources of which is not properly explained by the assessee. The total finance cost incurred of Rs. 40.35 crores is one of the major expenditure reflected glaringly in the face of the profit and loss account. Further, we find a specific query was raised by the ld AO vide notice u/s 142(1) of the Act dated 24.12.2020 vide question No. 5 specifically asking details of borrowings made by the assessee and interest paid thereon. The assessee filed its reply dated 08.01.2021 giving the complete details of long term and short term borrowings obtained from various banks and financial institutions together with the details of interest paid thereon. Hence, it cannot be said that the ld AO had made any enquiry on the finance cost of Rs. 40.35 crores. Accordingly, the ld PCIT erred in assuming revision jurisdiction u/s 263 of the Act qua this issue. Further, we also find the ld PCIT absolu....
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....t was held that the lessee is the owner of the assets given on finance lease and hence, eligible to the claim of depreciation. It was also clarified that assessee had duly offered the principal portion of the lease rental for assets given by finance lease to tax in the return of income itself. The ld AO on appreciating this reply and also placing reliance on the decision of the Hon'ble Supreme Court which is in favour of the assessee had taken only plausible view and had allowed the depreciation to the assessee. How this could be treated as lack of enquiry by the ld AO. Further, we also find that the very same issue was also subject matter of adjudication in assessee's own case for AYs 2001- 02, 2003-04, 2004-05, 2005-06 in ITA No. 1357/Del/2005; 4256/Del/2016; 4206/Del/2011 and 13/Del/2012 respectively dated 29.08.2016 wherein, the very same issue was allowed in favour of the assessee by this Tribunal. Hence, there is absolutely no reason for the ld AO to take a divergent view in this regard. Very strangely the ld PCIT goes to conclude that the depreciation has not been correctly claimed which is without any basis and the decision of the Hon'ble Supreme Court in the case o....