2014 (7) TMI 1172 - AT - Income Tax

Revision u/s 263 - while making the disallowance under section 14A, the provisions of Rule 8D had not been applied - Held that - As it is noticed that the consequential order has already been passed in respect of the order passed under section 263 and also as it is noticed that the appeal has been filed by the assessee against the said consequential assessment order and the issue is only in relation to the computation of the average value of investment, the income from which does not form any part of the total income, we are of the view that the appeal filed by the assessee against the order passed under section 263 has become infructuous and consequently the same stands dismissed. - Decided against assessee.

Summary

Issues:
Appeal against order passed under section 263 of the Income Tax Act, 1961 for assessment year 2008-09.

Analysis:
The appeal was filed by the assessee against the order passed under section 263 by the ld. Commissioner of Income Tax, Kolkata-III. The ld. CIT invoked his power under section 263 on the ground that the provisions of Rule 8D had not been applied while making the disallowance under section 14A. The ld. A.R. representing the assessee argued that the provisions of Rule 8D had been specifically applied during the disallowance under section 14A. The Assessing Officer had directed the assessee to provide a fresh computation of disallowance under section 14A, and the computation was shown in the assessment order. The only difference between the computation made by the assessee and the consequential assessment order was in respect of the average value of investment. The assessee's appeal against the consequential assessment order was pending for disposal. The ld. CIT, D.R. supported the order under section 263, emphasizing the variation in the computation of the disallowance under section 14A.

The Tribunal considered the rival submissions and noted that the consequential order had already been passed regarding the order under section 263. The appeal filed by the assessee against the consequential assessment order was only related to the computation of the average value of investment, which did not form part of the total income. Consequently, the Tribunal found the appeal against the order passed under section 263 to be infructuous and dismissed the same. Therefore, the appeal of the assessee was ultimately dismissed by the Tribunal.

This detailed analysis highlights the key arguments presented by both parties, the basis for invoking section 263, the specific issue of computation of disallowance under section 14A, and the Tribunal's decision regarding the appeal filed by the assessee.