2025 (8) TMI 189

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Ld. PCIT under section 263 is correct and whether twin conditions of "error" and prejudicial to the interest of revenue' were fulfilled or not. During the hearing proceedings before the Bench, the ld. AR of the appellant has argued on the following lines: (a) The appellant has not claimed the deduction of expenses under the year in question and hence cannot be said to be prejudicial to the interest of Revenue. (b) As mentioned in the grounds of appeal, the twin conditions of "error" and prejudicial to the interest of Revenue" were not fulfilled and the exercise of jurisdiction by ld. PCIT u/s 263 is incorrect. (c) The AO can examine the deductibility of expenses in the year of claim. (d) The Ld.AR of Appellant relied on the decisio....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... TDS was deducted on these payments were not examined by the AO. (c) The appellant company claimed depreciation of Rs. 24.74 lakhs. The assessee was specially requested to provide documentary proof, new assets acquired and purchase invoices. But, the appellant has provided only a depreciation chart and there are no evidences of acquiring assets and "put to use" for the purposes of business to claim depreciation. (d) The assessee has interest bearing funds of Rs. 72.35 Cr. and incurred an interest of Rs. 7.17 cr. But the appellant company has given interest free loans to "related parties" to the extent of Rs. 16.64 cr. In view of the same, the Ld. PCIT observed that an amount of Rs. 1.64 cr. has to be disallowed from the interest claim o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t and its genuineness. Similarly, disallowance of interest to the extent of interest free loans given to related parties was also not made by ld. AO. The genuineness of claim of depreciation was also not examined. (g) Finally, the ld. PCIT has given full opportunity to the appellant to explain all these aspects, took their explanation into consideration and categorically held in the para-III of order u/s 263 that Ld. AO failed to examine these issues mentioned in the notice and also in view of Explanation 2 of clause (a) and (b), it is held that twin conditions of "error" and "prejudicial to the interest" were satisfied as per the law laid down in the decisions of "Malabar Industrial Co. (109 ITR 66 (SC) and "Max India Ltd." of Hon'ble Su....