TaxTMI 
TaxTMI 
2025 (3) TMI 1968
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....d the rival submissions made by the respective parties and we have also perused the relevant materials available on record including the order passed by the Ld. PCIT and the assessment order passed under section 143(3) of the Act. 3. The brief facts leading to the case are that the assessee, engaged in the business of developing, leasing real estate projects and providing facility management services, filed its return of income on 28.11.2017 declaring total loss at rupees (-)24,92,65,859/-. The case of the assessee was selected for complete scrutiny under CASS and notice under Section 143(2) dated 22.09.2019 was issued and duly served upon the assessee. After completion of all the procedural formalities the assessment was finalized under section 143(3)/144C(3)/144B of the Act on 26.10.2021 at a loss of Rs. (-)19,32,14,069/-. 4. Subsequently on 05.03.2024 the Ld. PCIT issued a show cause notice under Section 263 of the Act requiring the assessee to explain as to why action under Section 263 of the Act for revision of assessment order dated 26 October 2021 passed under Section 143(3)/144C(3)/144B of the act by the National faceless assessment centre (NFAC) should not be initiat....
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....t been deducted, shall not be allowed as deduction in computing the income chargeable under the head 'Profit and Gains of Business or Profession'. The interest paid is liable for TDS deduction u/s 194A. However, the same has not been deducted. 3. Therefore, an amount of Rs. 2,04,46,958/- (30% of Rs. 6,81,56,528/-) should have been disallowed while passing the assessment order. The mistake resulted in over assessment of loss of Rs. 2,04,46,958/- resulting in potential tax effect of Rs. 67,60,377/-. 4. Thus, the assessment completed in your case u/s 143(3)/144C(3)/144B of the I.T. Act, for A.Y. 2017-18 on 26.10.2021 appears to be erroneous in so far as it is prejudicial to the interest of revenue under the ambit of the provisions of section 263 of the I.T. Act, 1961. 5. You are, therefore, required to show cause as to why an order in terms of provision of section 263 of the I. T. Act may not be passed in your case for A.Y 2017-18. 6. In view of this, you are allowed an opportunity of being heard preferably by filing written submission through ITBA Portal/online on or before 07.03.2024 at 12:00 P.M. giving reasons as to why the assessment order ....
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....observed as under by your goodself:- 2. I have called for the assessment records from the AO and examined the same. On perusal of the records, it is noticed that an amount of Rs. 6,81,56,528/- was debited as 'Interest expense on security deposits' in the P&L accounts under the head 'Finance Costs'. Also, interest of Rs. 96,93,67,027/- as 'Interest expenses on debts and borrowings' was debited under the head 'Finance Costs' in the P&L account. As per Para 34(a) of the Tax Audit Report, TDS u/s 194A of the I. T. Act was deducted on an amount of Rs. 9,79,58,057/- being 'Interest other than interest on securities'. However, no TDS u/s 194A of the I. T. Act is deducted on Rs. 6,81,56,528/- debited in the P&L account as 'Interest Expenses on security deposits', which was liable for deduction u/s 194A of the I. T. Act. As per provisions of section 40(ia) of the I. T. Act, 30% of any sum payable to a resident on which tax is deductible at source under Chapter XVII-B of the I. T. Act has not been deducted, shall not be allowed as deduction in computing the income chargeable under the head 'Profit and Gains of Business or Professio....
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....adjustment. The said amount of Rs. 31,62,85,648/- includes the above amount of Rs. 681,56,528/- towards 'interest expense on security deposit', the break-up of which is as under:- Particulars of Ind-AS adjustments Reference Amount (INR) Interest on CCD-Finance Expense (1) 489,995,923 Interest on CCD-Finance Income (2) (200,371,934) Premium on NCD-Finance Income (4) (66,123,262) Interest on loan (5) (30,477,335) Ancillary Cost on loan (6) (3,060,352) Interest on security deposit (7) 681,56,528 Interest on LRD (8) (11,916,372) Interest expense on reversal (9) (2,274,358) Total (1+2+3+4+5+6+7+8+9) 31,62,85,648 3. The amount disallowed by the Assessee in the return of income is Rs. 36,28,27,986/- (which includes the above amount of Rs. 31,62,85,648/-) and the same is reflected at serial number 24 of "Schedule BP" of income-tax return (copy enclosed as Annexure-7) filed for the year under assessment which also inter-allia includes the above amount of Rs. 681,56,528/-. Relevant extract from the income-tax return is reproduced below for your goodself's easy reference:- 22 ....
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....a)(ia) of the Act) will lead to double disallowance of same amount which is not allowed in accordance with the provisions of the Act and rules set down by the judicial precedents. Issue examined during the course of original assessment: 3. It is well settled position in law that when the Assessee had furnished the requisite information and the Assessing Officer had completed the assessment after considering all the facts, in such a case, the revision of assessment order under section 263 of the Act is not allowed on the ground that the assessing officer had not made proper enquiries. In this regard, the Assessee would like to place its reliance on following case laws:- CIT vs. Anil Kumar Sharma: 335 ITR 83 (Delhi HC) The Hon'ble Delhi High Court held that even though the assessment order did not patently indicate that the issue in question had been considered by the assessing officer, the record showed that the assessing officer had applied his mind and once such application of mind was discernible from the record, proceedings under section 263 of the Act would fall into the arena of "the Commissioner having a different opinion", which is impermi....
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....ding on a particular issue allowing the claim of assessee, it cannot lead to the conclusion that the facts were not considered by the assessing officer or or that no view in respect of the same was formed. Further, in the following decisions, too, it has also been held that merely because there is no discussion in the assessment order on any particular issue, it cannot be presumed that the assessing officer did not examine the issue with respect to which there is no discussion. CIT v. Gabriel India Limited [1993] 71 Taxman 585 (Bombay HC) CIT v. Goyal Private Family Specific Trust [1987] 35 Taxman 522 (Allahabad) The Full Bench of Delhi High Court in the case of CIT v. Kelvinator of India Ltd. [2002] 123 Taxman 433 (Delhi HC), held that when a regular order of assessment is passed under section 143(3) of the Act, a presumption can be raised that such an order has been passed on application of mind. The said decision of Hon'ble High Court was later affirmed by the Supreme Court in 320 ITR 561 (SC). Applying the ratio laid down by the above judgments, to the facts of the present case, it is submitted that the Ld. AO had duly applied hi....
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....enue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open." [Emphasis Supplied] CIT vs Anil Kumar Sharma: 335 ITR 83 ( Delhi HC) Following the judgement in case of Sunbeam Auto (supra), the Delhi High Court observed that: "In view of the above discussion, it is apparent that the Tribunal arrived at a conclusive finding that, though the assessment order does not patently indicate that the issue in question had been considered by the Assessing officer, the record showed that the Assessing officer had applied his mind. Once such application of mind is discernable from the record, the proceedings under section 263 would fell into the area of the Commissioner having a different opinion. We are of the view that the findings of facts arrived at by the Tribunal d....
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....C) DIT v. Jyoti Foundation [2013] 38 taxmann.com 180 (Delhi HC) Principal CIT v. Shivshahi Punarvasan Prakalp Ltd. [2023] 155 taxmann.com 408 (Bombay HC) Principal CIT v. Om Rudra Priya Holiday Resort (P.) Ltd. [2019] 109 taxmann.com 63 (Rajasthan HC) CIT v. Chemsworth (P.) Ltd. [2020] 119 taxmann.com 358 (Karnataka) CIT v. Nirav Modi [2017] 77 taxmann.com 15 (SC) MOIL Ltd. v. CIT [2017] 81 taxmann.com 420 (Bombay HC) CIT v. Fine Jewellery (India) Ltd. [2015] 55 taxmann.com 514 (Bombay HC) CIT v. Ratlam Coal Ash Co. [1987] 34 TAXMAN 443 (MP HC) Ashoke Kumar Parasramka v. ACIT [1998] 65 ITD 1 (Cal. Tribunal) CIT v. Mehrotra Brothers [2004] 270 ITR 157 (MP HC) Paul Mathews & Sons v. CIT [2003] 129 Taxman 416 (Kerala HC) Civ. Fine Jewellery (India) Ltd. [2015] 55 faxmann.com 514 (Bombay HC) CIT v. Ratlam Coal Ash Co. [1987] 34 ΤΑΧΜΑΝ 443 (MP HC) Ashoke Kumar Parasramka v. ACIT [1998] 65 ITD 1 (Cal. Tribunal) CIT v. Mehrotra Brothers [2004] 270 ITR 157 (MP HC) Paul Mathews & Sons v. CIT [2003] 129 Taxman 416 (Kerala HC....
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....arned AO after careful consideration of all the facts submitted by the assessee and thus the allegation of assessing officer not carrying out proper enquiry regarding the issue is not sustainable as was the main argument advanced by the assessee's counsel. 9. Under these facts and circumstances of the matter the order passed by the learned AO cannot be termed as erroneous nor prejudicial to the interest of revenue; these two conditions envisaged under section 263 of the Act, therefore, cannot be invoked as also the case sought to be made out by the assessee. 10. After careful perusal of the records it appears that the amount disallowed by the assessee in the return of income is Rs. 36,28,27,986/- which includes the above amount of Rs. 31,62,85,648/- which is reflecting at serial No. 24 of 'schedule B' of Income Tax Return for the assessment year under consideration filed by the assessee which inter alia includes the disputed amount of Rs. 6,81,56,528/-. The breakup of Ind-AS adjustment of Rs. 31,62,85,608/-) is as follows: Particulars of Ind-AS adjustments Reference Amount (INR) Interest on CCD-Finance Expense (1) 489,995,923 Interest on CCD-Finance Incom....