Uttamchand Durgadas Goenka, Buldhana V. Commissioner of Income-tax -1, Nagpur

ITA 29/NAG/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1684 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 21-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: KAILASH B LOHIYA
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Capital receipt
• Section: 143(3); 10; 154; 2

Judgement Text

1 ITA NO. 29/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NOS. 29/NAG/2013 ASSESSMENT YEAR : 2008 - 09. UTTAMCHAND DURGADAS GOENKA, COMMISSIONER OF INCOME TAX - 1, GOENKA OIL INDUSTRIES, V/S. NAGPUR. BALAJI PLOTS, KHAMGAON, DIST. BULDHANA. PAN ABHPGS5427D APPELLANT. RESPONDENT. APPELLANT BY : SHRI KAILASH B. LOHIYA. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 22 - 06 - 2015 DATE OF PRONOUNCEMENT : 28 TH AUGUST, 2015 O R D E R PER SHAMIM YAHYA, A.M. . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX - 1, NAGPUR DATED 27 - 12 - 2012 AND PERTAINS TO ASSESSMENT YEAR 2008 - 09. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DIRECTING TO REDUCE THE SPECIAL CAPITAL INCENTIVE FROM THE RESPECTIVE BLOCKS OF ASSETS AND ALLOW THE DEPRECIATION ACCORDINGLY. 2. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE INCOME TAX APPELLATE TRIBUNAL JUDGMENTS DIRECTLY ON THE ISSUE OF SP ECIAL CAPITAL INCENTIVE AFTER INSERTION OF EXPLANATION 10 TO SECTION 41(1). 2 ITA NO. 29/NAG/2013 3. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACT THAT THE PROCEEDINGS HAVE BEEN STARTED AT THE BEHEST OF AUDIT NOTE, ONCE UNDER SECTION 154 AND SECONDLY UNDER SECTION 263. 4. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN RELYING ON THE JUDGMENT OF THE STEEL AUTHORITY OF INDIA LIMITED V/S. CIT (20 TAXMAN 198 DELHI) 2012 WHICH IS NOT RELEVANT AND REFERS TO WAIVER OF LOAN FOR PURCHASE OF ASSETS . 5. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACT THAT THE POINT OF SPECIAL CAPITAL INCENTIVE WAS INVESTIGATED, DISCUSSED AND DECIDED IN A.Y. 2007 - 08. 6. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACT THAT THE SPECIAL CAPITAL INCENTIVE WAS RECEIVED IN A.Y. 2002 - 03 AND ACTION UNDER 263 IS BARRED BY LIMITATION. 7. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACT THAT PAYMENT OF INTEREST @ 18% P.A. IS QUITE FAIR AND REASONAB LE. 8. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACT THAT 18% INTEREST P.A. IS ALLOWED IN A.Y. 2007 - 07 9. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACTS AND CIRCUMSTANCES UNDER WHICH INTEREST IS PAI D @ 18% P.A. 10. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACT THAT BANKS ARE CHARGING INTEREST @ 36% P.A. ON CREDIT CARDS. 11. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN NOT CONSIDERING THE FACT THAT BANKS ARE CHARGING INTEREST @ 16% P.A. ALONG WITH SECURITY OF IMMOVABLE PROPERTY. 12. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN CONSIDERING THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 09 - 10 PASSED BY THE JOINT COMMISSIONER OF INCOME TAX AKOLA. 13. THAT THE ORDER IS B AD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. IN THIS CASE THE LEARNED CIT NOTED THAT THERE WERE TWO ISSUES IN THE ASSESSMENT OF THE ASSESSEE, NAMELY, TREATMENT OF SPECIAL CAPITAL INCENTIVE OF 3 ITA NO. 29/NAG/2013 ` .5,79,750/ - AS PART TO BE REDUCED FROM THE COST OF THE ASSE T WITHIN THE MEANING OF EXPLANATION 10 TO SECTION 43(1); AND PAYMENT OF INTEREST AT AN INFLATED RATE OF 18% P.A. TO FAMILY MEMBERS ETC. THAT BOTH ISSUES APPARENTLY WERE NOT EXAMINED BY THE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS. THAT I T WAS SEEN INTER - ALIA FROM THE BALANCE SHEET THAT SPECIAL CAPITAL INCENTIVE FROM DISTRICT INDUSTRIES CENTRE, BULDHANA WAS AN ITEM WHICH WAS NEEDED TO BE REDUCED FROM THE COST OF THE ASSET AS PER EXPLANATION 10 TO SECTION 43(1) OF THE ACT. THAT T T WAS ALSO NOTED THAT WHEREAS THE ASSESSEE HAS PAID INTEREST ON UNSECURED LOANS TO SISTER CONCERN/FAMILY MEMBERS AT 18% P.A., INTEREST PAID TO OTHERS IS ONLY 12%. THAT T HE A.O. IN RESPECT OF SPECIAL CAPITAL INCENTIVE DID NOT CALL FOR THE DETAILS OF THE SAID SUBSID Y NOR DID EXAMINE THE STATUTORY POSITION. THAT T HE A.O. ALSO DID NOT EXAMINE PAYMENT OF INFLATED RATE OF INTEREST TO SISTER CONCERNS AND FAMILY MEMBERS FOR THE PURPOSES OF INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT IF NEED BE. HENCE THE CIT IS SUED NOTICE UNDER SECTION 263 OF THE I.T. ACT DATED 07 - 11 - 2012. 3. IN RESPONSE THE ASSESSEE SUBMITTED THAT CAPITAL INCENTIVE OF ` .5,79,750/ - WAS RECEIVED ON 23 - 11 - 2011 RELEVANT FOR ASSESSMENT YEAR 2002 - 03. THAT THE ISSUE OF THE SPECIAL CAPITAL INCENTIVE H AS BEEN EXAMINED IN DEPTH FOR ASSESSMENT YEAR 2007 - 08 IN SCRUTINY PROCEEDINGS. THAT THE ACTION UNDER SECTION 263 WAS BARRED BY LIMITATION. THAT THE SPECIAL CAPITAL INCENTIVE WAS GIVEN WITH AN OBJECT AND PURPOSE THAT NEW INDUSTRIES SHOULD BE ESTABLISHED IN BACKWARD AREAS OF MAHARASHTRA. THAT THE INCENTIVE IS NOT GIVEN TO MEET THE COST OF CAPITAL ASSET. THAT IT HAS NO RELATION TO MEET THE COST OF CAPITAL ASSET. THAT THE ISSUE WAS SETTLED BY HONBLE APEX COURT IN THE CASE OF CIT V/S. P.J. CHEMICALS 210 ITR 8 30 (SC), CIT V/S. KCA LTD. 198 CTR 331 (MUMBAI), 286 ITR 648 (GUJ), 286 ITR 544 (GUJ). THAT A SSESSEE ALSO RELIES ON 326 ITR 498 (MAD) AND 119 ITR 976 (VIZAG). FURTHER, AS REGARDS PAYMENT OF INTEREST TO THE FAMILY MEMBERS AND RELATED CONCERNS, IT IS SAID T HAT 4 ITA NO. 29/NAG/2013 INTEREST HAS BEEN PAID AT 18% NO DOUBT BUT SUCH PAYMENT IS SAID TO HAVE BEEN MADE ON ACCOUNT OF THE FACTS THAT THERE IS NO PRESSURE FOR REPAYMENT OF THOSE LOANS AFTER A FIXED PERIOD. THAT NO BROKERAGE IS PAID ON SUCH LOANS. THAT INTEREST IS PROVIDED ON CE IN A YEAR AND HENCE DOES NOT BECOME CUMULATIVE. THAT THE ASSESSEE IS NOT REQUIRED TO FURNISH ANY SECURITY FOR OBTAINING THESE LOANS AND HENCE NO EXPENDITURE IS INCURRED TO FURNISH ANY SECURITY. CONTRARY, LOANS FROM THE MARKET ARE PROCURED FOR A FIXED PE RIOD AT THE PREVAILING MARKET RATE, ON PAYMENT OF BROKERAGE, ON PAYMENT OF ADVANCE CHEQUES BEFORE THE DUE DATE, AND ALSO INTEREST IS REQUIRED TO BE PAID AT THE END OF THE TERM. T HAT LOAN PROCURED FROM SISTER CONCERNS, RELATED PARTIES AND FAMILY MEMBERS SH OULD BE RECOMPENSED AT A HIGHER RATE THAN THOSE LOANS FROM THE MARKET ON ACCOUNT OF THE FACTORS MENTIONED SUPRA. THAT INTEREST PAID BY THE ASSESSEE HAS BEEN ALLOWED AFTER CONSIDERING THE FACTS ON RECORD. 4. HOWEVER, THE LEARNED CIT WAS NOT CONVINCED. HE RE FERRED TO THE DECISION OF STEEL AUTHORITY INDIA V/S. CIT 20 TAXMANN.COM 198 (DEL) AND HELD THAT THE ISSUE FROM ABOVE DECISION APPLIES AND THE A.O. IS DIRECTED TO REDUCE SPECIAL CAPITAL INCENTIVE FROM THE RESPECTIVE BLOCK AND ALLOW DEPRECIATION. WITH REGAR D TO INTEREST PAID TO PERSONS UNDER SECTION 40A(2)(B), LEARNED CIT NOTED THAT INTEREST WERE ALSO PAID TO OTHER PERSONS NOT COVERED UNDER SECTION 40A(2)(B) IN THE RANGE OF 12 TO 15%. HE REJECTED THE ASSESSEES CONTENTION IN THIS REGARD. HE HELD THAT , NOW A VIEW HAS BEEN TAKEN IN THE ASSESSEES OWN CASE FOR A.Y. 2009 - 10 IN AN ORDER UNDER SECTION 143(3) THAT RATE OF INTEREST TO RELATED CONCERNS SHOULD NOT JUSTIFIABLY EXCEED 16%. TAKING INTO ACCOUNT THE FACTS OF THIS CASE AND THE FINDING THAT INFLATED RATE OF INTEREST HAS BEEN PAID TO RELATED CONCERNS AND PERSONS, THE LEARNED CIT HELD THAT 16% OF INTEREST SHOULD BE REASONABLY ALLOWABLE TO THE PERSONS COVERED UNDER SECTION 40A(2)(B). HE DIRECTED THE A.O. TO GIVE EFFECT ACCORDINGLY. 5 ITA NO. 29/NAG/2013 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS WE FIND THAT THE ASSESSEE HAS RECEIVED SPECIAL CAPITAL INCENTIVE OF ` .5,79,715/ - ON 23 - 11 - 2001 IN ASSESSMENT YEAR 2002 - 03. THE SAID CAPITAL INCENTIVE WAS ALLOWED AS CAPITAL RECEIPT SINCE THEN INCLUDING THAT IN A SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2007 - 08. NOW WITHOUT ANY CHANGE IN FACTS AND LAWS THE ASSESSING OFFICER WAS NOT SUPPOSED TO TAKE A DIFFERENT VIEW. HENCE IN OUR CONSIDERED OPINION, THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT ERRONEOU S IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE THE JURISDICTION ASSUMED BY THE LEARNED CIT ON THIS ACCOUNT IS NOT AT ALL SUSTAINABLE. 6. WE FURTHER FIND THAT THE DECISION OF STEEL AUTHORITY OF INDIA (HONBLE DELHI HIGH COURT SUPRA) R ELIED UPON BY THE LEARNED CIT IS NOT AT ALL APPLICABLE ON THE FACTS OF THE CASE. LEARNED CIT HAS HIMSELF ADMITTED THAT IT WAS RENDERED IN A DIFFERENT CONTEXT OF REMISSION OF LIABILITY IN RESPECT OF LOANS WHICH WERE APPLIED TO FINANCE THE COST OF ASSETS. HO NBLE APEX COURT HAS EXPOUNDED IN THE CASE OF SUN ENGINEERING THAT LINES/PARAGRAPHS SHOULD NOT BE PICKED UP FROM THE ORDERS OF THE HIGHER AUTHORITIES DEHORSE THE CONTEXT. HENCE WE HOLD THAT LEARNED CITS ORDER U/S 263 BY PLACING RELIANCE ON THE ABOVE HO NBLE DELHI HIGH COURT DECISION IS MISPLACED AND HENCE THE ORDER U/S 263 IS NOT SUSTAINABLE ON THIS ACCOUNT ALSO. 7. WE FURTHER FIND THAT IDENTICAL ISSUE HAS BEEN CONSIDERED BY US IN THE CASE OF M/S SURAJDEV INDUSTRIES IN ITA NO. 07/NAG/2013 VIDE ORDER DATED 24 - 04 - 2015. WE MAY REFER TO OUR ADJUDICATION IN THIS CASE AS UNDER : 6 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORD. WE FIND THAT SEC. 263 OF THE ACT POSTULATES THAT [PRINCIPAL COMMISSIONER OR] COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN 6 ITA NO. 29/NAG/2013 OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 7 . NOW WE FIND THAT LD. CIT HAS OPINED THAT THE ORDER OF ASSESSING OFFICER IN THIS CASE IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE BECAUSE HE HAS NOT MADE ANY ENQUIRY ON THIS SUBJECT DURING THE CURRENT ASSESSMENT YEAR. THAT THE ISSUE WAS NEITHER RAISED BY THE ASSESSING OFFICER NOR BY THE ASSESSEE SUBMITTED ANY EXPLANATION ON THE ISSUE OF SUBSIDY IN THE ASSESSMENT PROCEEDIN GS. NOW WE FIND THAT SUBSIDY IN THE PRESENT CASE WAS RECEIVED IN A.Y. 2004 - 05. IT IS NOT THE CASE THAT IN THE PRECEDING ASSESSMENT YEARS, THERE WAS ANY DISALLOWANCE ON ACCOUNT OF DEPRECIATION. THE ASSESSEES DEPRECIATION CLAIM ON THIS ACCOUNT WAS NOT TINKERED WITH. AS AGAINST THAT AS PER ASSESSEES EXPLANATION, THIS ISSUE WAS GONE INTO IN THE PRECEDING ASSESSMENT YEARS BY THE ASSESSING OFFICER AND NO DISALLOWANCE WAS MADE. ON THIS PREMISE, IN OUR CONSIDERED OPINION, WHEN THE ISSUE OF SUBSIDY RECEIVED WAS NOT A SUBJECT MATTER OF CONSIDERATION FOR THE PRESENT ASSESSMENT YEAR, THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO ENQUIRE INTO THE ASPECT OF SUBSIDY RECEIVED AND ITS REDUCTION FROM COST OF FIXED ASSETS. HENCE, ON THIS GROUN D ALSO THAT SUBSIDY WAS RECEIVED IN A.Y. 2004 - 05 AND THE ISSUE RELATING TO IMPACT OF SUBSIDY ON DEPRECIATION ON FIXED ASSETS CANNOT BE RAISED BY THE ASSESSING OFFICER IN A.Y. 2008 - 09, WE FIND THAT THE JURISDICTION EXERCISED BY THE LD. CIT IS NOT SUSTAIN ABLE. FURTHERMORE, WE FIND THAT IT IS THE SUBMISSION OF THE ASSESSEE THAT EVEN AFTER INTRODUCTION OF EXPLANATION 10 TO SECTION 43(1) OF THE ACT, THERE IS NO BLANKET MANDATE THAT ALL CAPITAL SUBSIDY RECEIPTS HAS TO BE ADJUSTED FROM THE COST OF FIXED AS SETS FOR THE PURPOSE OF COMPUTATION OF DEPRECIATION. IN THIS REGARD, WE HAVE GONE THROUGH THE CASE LAWS REFERRED BY THE LEARNED COUNSEL F OR THE ASSESSEE. IN THE CASE OF SASISRI EXTRACTIONS LTD (SUPRA). THE TRIBUNAL HAD EXPOUNDED AS UNDER: - (HEAD NO TES ONLY) DEPRECIATION - ACTUAL COST - SUBSIDY FOR SETTING UP INDUSTRIES IN THE STATE TARGET 2000 SCHEME WAS INTENDED TO ACCELERATE INDUSTRIAL DEVELOPMENT OF THE STATE OF ANDHRA PRADESH THOUGH THE COST OF ELIGIBLE INVESTMENT WAS TAKEN AS THE BASIS FOR THE PURPOSE OF DETERMINING THE AMOUNT OF SUBSIDY, IT WAS NOT SPECIFICALLY INTENDED TO SUBSIDE THE COST OF THE CAPITAL 7 ITA NO. 29/NAG/2013 THUS, THE INCENTIVE IN THE FORM OF SUBSIDY CANNOT BE CONSIDERED AS A PAYMENT DIRECTLY OR INDIRECTLY TO MEET ANY PORTION OF THE ACTU AL COST OF THE ASSETS AND IT FALLS OUTSIDE THE KEN OF EXPLN. 10 TO S. 43(1) HENCE, THE SUBSIDY AMOUNT CANNOT BE REDUCED FROM THE COST OF CAPITAL ASSET FOR THE PURPOSE OF COMPUTING DEPRECIATION. 8 . NOW, IN THE PRESENT CASE, WE HAVE ALSO GONE THROUGH T HE SCHEME OF THE SUBSIDY. THE SUBSIDY IS MEANT FOR THE PURPOSES OF DEVELOPMENT OF INDUSTRIES IN THE BACKWARD REGION OF VIDARBHA. THE PREAMBLE SUGGESTS THAT AIM OF THE SCHEME WAS TO ACHIEVE DISPERSAL OF INDUSTRIES OUTSIDE THE BOMBAY - THANE - PUNE BELT AND TO ATTRACT THEM TO THE UNDERDEVELOPED AND DEVELOPING AREAS OF THE STATE. THE SCHEME PROVIDES THAT THE SPECIAL CAPITAL INCENTIVE WAS ADMISSIBLE AS A GRANT. THOUGH, THE QUANTUM OF GRANT WAS TO BE COMPUTED AS PERCENTAGE OF FIXE D CAPITAL INVESTMENT, IT NOWHERE SUGGESTED THAT THE AMOUNT OF GRANT WAS TO BE REDUCED FROM THE COST OF FIXED ASSETS. HENCE, ON MERITS ALSO PRIMA FACIE WE FIND THAT THE ASSUMPTION OF JURISDICTION BY THE LD. CIT IS NOT SUSTAINABLE. IN THIS REGARD, WE AL SO PLACE RELIANCE UPON THE FOLLOWING OBSERVATIONS IN THE CASE OF SASISRI EXTRACTIONS LTD. (SUPRA): - 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN OUR CONSIDERED OPINION, EVEN AFTER INSERTION OF EXPLANATION 10 TO SEC . 43(1) OF THE ACT, THE BASIS PRINCIPLE UNDERLYING IN THE DECISION OF THE APEX COURT IN THE CASE OF P.J. CHEMICALS LTD. (SUPRA) STILL HOLDS THE FIELD. THEIR LORDSHIPS ANALYZED THE EXPRESSION MET DIRECTLY OR INDIRECTLY TO COME TO THE CONCLUSION THAT ONLY IN A CASE WHERE A SUBSIDY OR OTHER GRANT WAS GIVEN TO OFFSET THE COST OF AN ASSET, SUCH PAYMENT/GRANT WOULD FALL WITHIN THE EXPRESSION MET, WHEREAS THE SUBSIDY RECEIVED MERELY TO ACCELERATE THE INDUSTRIAL DEVELOPMENT OF THE STATE CANNOT BE CONSIDERED AS PAYMENTS MADE SPECIFICALLY TO MEET A PORTION OF THE COST OF THE ASSETS. THUS, LD. CITS OBSERVATION THAT EXPLANATION 10 OF SECTION 43(1) MANDATES THAT INVARIABLY IN ALL CASES THE CAPITAL SUBSIDY HAS TO BE ADJUSTED FROM THE COST OF THE ASSET IS NOT CORRECT. 8 ITA NO. 29/NAG/2013 9. HENCE, WE FIND THAT ORDER OF THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL AS THERE WAS NO REQUIREMENT ON HIS PART THAT IN THE COURSE OF ASSESSMENT OF A.Y. 2008 - 09 HE SHOULD ENQUIRE INTO THE ASPECT OF CAPITAL SUBSIDY RECEIVED IN A.Y. 2004 - 05. FURTHERMORE ON MERITS ALSO AS ABOVE, WE HAVE ALSO FOUND THAT LD. CITS ORDER IS NOT SUSTAINABLE. 10. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENTS, WE ARE OF THE OPINION THAT THE ASSUMPTION OF JURISDICTION U/S. 263 OF THE ACT BY THE LD. CIT IS NOT SUSTAINABLE. ACCORDINGLY, WE QUASH THE SAME. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, IT CANNOT BE SAID THAT JURISDICTION ASSUMED BY THE LE ARNED CIT U/S 263 WAS LEGALLY PERMISSIBLE. ACCORDINGLY WE QUASH THE LEARNED CITS ORDER ON THIS ISSUE. 9 . AS REGARDS THE ISSUE OF INTEREST PAID ON LOAN ACCOUNT TAKEN FROM SISTER CONCERNS/FAMILY MEMBERS, LEARNED CIT HAS OBSERVED THAT THE SAME HAS BEEN PAID AT AN INFLATED RATE OF 18%` WHILE INTEREST PAID TO OTHERS IS ONLY 12%. ON THIS ISSUE IT IS ALSO UNDISPUTED THAT SUCH PAYMENTS WERE MADE BY THE ASSESSEE IN THE PAST ALSO. ASSESSEE HAS DULY SUBMITTED THE RATIONALE OF PAYING INTEREST AT SUCH RATE ON TH ESE LOANS. THERE IS N O CASE THAT THESE SUBMISSIONS ARE WHOLLY UNTENABLE. BY NO STRETCH OF IMAGINATION THE RATE OF INTEREST ADOPTED IN SUBSEQUENT ASSESSMENT YEAR CAN BECOME YARDSTICK FOR THE LEARNED CIT TO EXERCISE JURISDICTION U/S 263 IN ANY PRECEDING YEAR. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ORDE R OF THE AO CANNOT BE TERMED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE LEARNED CITS ORDER U/S 263 ON THIS ISSUE IS ALSO NOT SUSTAINABLE. 10. WE FURTHER NOTE THAT THE ASSESSEE HAS SUPPORTED THE ARGUMENTS AGAINST LEARNED CITS OR DER U/S 263 , O N THIS GROUND ALSO THAT THE AO HAS ISSUED NOTICE U/S 154 OF THE I.T. ACT TO THE ASSESSEE ON THE SAME POINTS AS RAISED BY THE LEARNED CIT U/S 263 VIDE NOTICE U/S 154 OF THE I.T. ACT DATED 19 - 07 - 2011. THE SAME WAS SUBSEQUENTLY DROPPED BY THE A . O. IN THESE CIRCUMSTANCES THE ASSESSEES 9 ITA NO. 29/NAG/2013 COUNSEL CONTENDED THAT J URISDICTION U/S 263 IS NOT PERMISSIBLE. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON ITAT, CHANDIGARH BENCH DECISION IN THE CASE OF JASWINDAR SIN GH VS. CIT 150 TTJ 33. WE FIND THAT WE HAVE ALREADY HELD IN THE EARLIER PARAS OF OUR ORDER THAT THE ORDER OF LEARNED CIT IS NOT SUSTAINABLE AND THE SAME IS LIABLE TO BE QUASHED. HENCE IN OUR CONSIDERED OPINION, ADJUDICATION ON THIS LIMB OF THE ASSESSEES A RGUMENT IS ONLY OF ACADEMIC INTEREST AND HENCE WE ARE NOT DEALING WITH THE SAME. 11. IN THE RESULT, THE ORDER U/S 263 BY THE LEARNED CIT IS QUASHED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF AUGUST, 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 28 TH AUGUST, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CI T(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR