BLACK ROCK FINANCIAL SERVICES PVT. LTD.,AHMEDABAD vs. THE PR. CIT-1, AHMEDABAD

This appeal is filed by the Assessee against order dated 30.03.2023 passed by the Principal Commissioner of Income Tax, Ahmedabad -1 for the Assessment Year 2018-19.

The assessee has raised the following grounds of appeal :-

Being aggrieved by the Order under Section 263 of the Act, the assessee filed appeal before the Tribunal.

The Ld. AR submitted that the fact of Rs.1,72,76,00,000/- received from Fortune Broking Intermediary Pvt. Ltd. was received in the end of the month of March and is in fact in the nature of current account for Securities Trading but the said fund was available with the Company interest-free at the end of the year. Hence, the interest-free advances provided by the assessee Company as mentioned by the PCIT i.e. Ajay S Patel and Fortune Gilts Pvt. Ltd. that of Rs.141.84 Crores are provided to them in the month of March only so the said fund was advanced interest-free in the month of March and received also in the month of March almost on similar dated. Therefore, at the time of interest-free advances provided by the Company, the interest- free fund was available to it though in the nature of current account. The Ld. AR submitted that these details were given to the Assessing Officer and, therefore, the question of disallowance under Section 36(1)(iii) of the Act does not arise. The PCIT was not justified in holding that the Assessment Order is erroneous and prejudicial to the interest of Revenue. The Ld. AR further submitted that the assessee disallowed Rs.2,11,807/- under Section 14A which is to the extent of exempt income and, therefore, the Assessing Officer has rightly taken this into account and has not disallowed as disallowance was done to the extent of exempt income on the part of the assessee. Thus, on this account also the PCIT was not justified in holding that the assessment is prejudicial to the interest of Revenue.

The Ld. DR submitted that no enquiry as to these two aspects related to disallowance under Section 36(1)(iii) of the Act was done as well as that of disallowance under Section 14A read with Rule 8D as per the amended provisions. The Ld. DR relied upon the Order of the PCIT.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer has examined the issue related to the amount of Rs.1,72,76,00,000/- received from Fortune Broking Intermediary Pvt. Ltd. In fact, the submissions given by the assessee during the assessment proceedings that the said amount was received at the end of the month of March and is reflected in the current account as well as the said amount was received in the month of March itself which does not attract interest and, therefore, the issue was properly verified by the Assessing Officer and, therefore, the observation of the PCIT that the disallowance in respect of Section 36(1)(iii) of the Act should have been done does not come in the picture as all the interest expenses are taking direct nexus of the company’s business cannot be disallowed solely on the ground that these are utilised for other than business purpose as reflects to the disallowance under Section 14A. The said issue is also verified by the Assessing Officer in consonance with the suo motu disallowance made by the assessee to that of exempt income and disallowance cannot be made more than the exempt income and that the Assessing Officer has taken plausible view in both these issues. The Assessing Officer has thoroughly verified these two issues and, therefore, the PCIT was not justified in exercising the provisions of Section 263 of the Act as this amounts to second opinion/view which is not permissible under Section 263 of the Act.

In the result, appeal of the assessee is allowed.