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Facts
The assessee filed a return of income, and the case was selected for scrutiny under Section 143(3), with the AO accepting the returned income. Subsequently, the PCIT issued a notice under Section 263, deeming the AO's order erroneous and prejudicial to revenue for not inquiring into the assessee's claim of loan interest as business expenses, asserting the loan was not utilized for business purposes.
Held
The Tribunal noted that the PCIT partly set aside the AO's order to verify the applicability of Section 14A and the utilization of the borrowed loan. It found no infirmity in the PCIT's order, concluding that no prejudice would be caused to the assessee if the claim was substantiated in remand proceedings, and accordingly upheld the PCIT's order.
Key Issues
Whether the PCIT's order under Section 263, setting aside an assessment due to the AO's failure to inquire into claimed business interest expenses and the applicability of Section 14A, was justified.
Sections Cited
143(3), 263, 14A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
Asst.Year 2020-2021 Thiruvenkitam Veeriah The Dy.Commissioner of Reddiar (Through L/H Beena v. Income-tax, Circle & TPS Veeriah Reddy) Kottayam. S.Veeriah Reddiar, KK Road Kottayam – 686 001. PAN : ACHPR9611D. (Appellant) (Respondent) Appellant by : Sri.R.Krishnan, CA Respondent by : Sri.Sundarasan S, CIT-DR Date of Pronouncement : 30.05.2025 Date of Hearing : 27.05.2025. O R D E R
Per Prakash Chand Yadav, JM :
The present appeal of the assessee is arising from the order of the Principal Commissioner of Income-tax dated 28th February, 2025 and relates to the assessment year 2020-2021.
Brief facts of the case as coming out from the orders of the authorities below are that the assessee has filed his return of income on 15th February, 2021 declaring a total income of Rs.12,12,4909. Thereafter the case of the assessee was selected for scrutiny and assessment u/s.143(3) of the Income- tax Act was passed by the Assessing Officer and accepted the returned income of the assessee. Thereafter the PCIT called for . Thiruvenkitam Veeriah Reddiar. assessment records and after examination of the assessment records, the PCIT issued notice u/s.263 of the Act asking the assessee as to why the assessment order passed by the AO will not be treated as erroneous and prejudicial to the interest of the revenue. In response to the notice u/s.263 issued by the PCIT, the assessee filed its written submission before the PCIT on 11th February, 2025. Thereafter, the PCIT considering the submissions of the assessee held that the order of the AO is erroneous and prejudicial to the interest of the revenue inasmuch as the AO has not inquired on the interest claimed by the assessee. It is the case of the Revenue that the assessee has claimed the payment of interest of loan as business expenses. The observations of the PCIT were that loan taken by the assessee has not been utilized for the purpose of business and hence the assessee is not entitled for the deduction of interest paid.
Aggrieved with the order of the PCIT, the assessee has come up in appeal before us.
The learned DR relied upon the orders of the authorities below.
After considering the rival submissions, we observe that in this case the PCIT has partly set aside the order of the AO in order to verify the applicability of provisions of sec.14A as well as the utilization of loan borrowed by the assessee. Therefore, we are of the view that no prejudice should be caused to the assessee, in case the assessee substantiate its claim in the
In the result, the appeal filed by the assessee is dismissed. Order pronounced on this 30th day of May, 2025.