M/S. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD.,,KOLKATA vs. PCIT-1, KOLKATA

The present appeal has been preferred by the assessee against the order dated 09.03.2022 of the Principal Commissioner of Income Tax [hereinafter referred to as ‘PCIT’] agitating against the revision order passed by the PCIT exercising his powers u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’).

The brief facts of the case are that the ld. PCIT noted that certain expenditure claimed by the assessee was pertaining to prior period, however, the Assessing Officer allowed the same in the year under consideration. He noted that there was nothing mentioned in the assessment order as to how these prior period expenses were allowable during the year under consideration. He accordingly held that the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. He accordingly set aside the impugned order of the Assessing Officer and restored the matter to the Assessing Officer for assessment afresh on this issue.

Being aggrieved, the assessee has come in appeal before us. We have heard the rival contentions and gone through the records. The ld. counsel for the assessee has demonstrated from the record that the assessee is in the business of small savings and the M/s The Peerless General Finance & Investment Co. Ltd Assessment Year: 2017-18 expenditure in question is relating to the interest payment made to various depositors. It has been further submitted that sometimes interest is accrued to the depositors but could not be paid to the concerned depositors in the same year but the same is deposited in the escrow account of the assessee. As and when the same is paid to the depositors, the expenditure accordingly is claimed. The ld. counsel, in this respect, has also demonstrated from the earlier years that this practice has been continuously followed by the assessee. There is no claim of the Revenue that the impugned expenditure has ever been claimed by the assessee in the previous year. The assessee has most fairly claimed the interest expenditure as and when it is actually paid to the concerned depositors. Under the circumstances, we do not find any fault with the impugned order of the Assessing Officer. In our view, the findings of the PCIT that the impugned order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue, is not established. In view of this, the impugned order of the ld. PCIT passed u/s 263 is hereby quashed.

In the result, the appeal of the assessee stands allowed. Kolkata, the 9th June, 2022. Sd/- Sd/- [Girish Agrawal] [Sanjay Garg] Accountant Member Judicial Member Dated: 09.06.2022. RS Copy of the order forwarded to: 1. M/s The Peerless General Finance & Investment Co. Ltd 2. PCIT-1, Midnapur 3. CIT(A)- 4. CIT- , 5. CIT(DR),