2017 (9) TMI 1692 - HC - Income Tax

Revision u/s 263 - addition u/s 14A - Held that - Learned counsel for the appellant-revenue very fairly submitted that the issue involved in the present appeal is covered against the revenue, by judgments of this Court in The Pr. Commissioner of Income Tax, Patiala Vs. State Bank of Patiala 2017 (5) TMI 843 - PUNJAB AND HARYANA HIGH COURT and The Pr. Commissioner of Income Tax, Patiala Vs. State Bank of Patiala 2017 (5) TMI 1551 - PUNJAB AND HARYANA HIGH COURT

Summary

Issues:
- Appeal under Section 260A of the Income Tax Act against ITAT order
- Addition of expenses against exempted income under Section 14A
- Validity of order under Section 263 of the Income Tax Act

Analysis:
1. The appellant-revenue filed an appeal challenging the ITAT order regarding the addition of expenses against exempted income under Section 14A of the Income Tax Act. The Assessing Officer initially made an assessment under Section 143(3) which included a disallowance of expenses. Subsequently, the Principal Commissioner of Income Tax passed an order under Section 263 deeming the assessment order as erroneous and prejudicial to revenue's interest. The Tribunal later quashed the Section 263 order. Following this, the Assessing Officer made a further addition of expenses under Section 14A, which was challenged by the assessee before the CIT(A). The CIT(A) held the Assessing Officer's order as infructuous based on the Tribunal's decision to quash the Section 263 order. The Tribunal upheld this decision, leading to the current appeal by the appellant-revenue.

2. The High Court heard the arguments presented by the appellant-revenue. The counsel for the appellant acknowledged that the issue in the appeal had been addressed in previous judgments of the Court, specifically referring to cases involving The Pr. Commissioner of Income Tax, Patiala Vs. State Bank of Patiala. The counsel conceded that no substantial question of law arose in the present appeal based on the precedents cited. Consequently, the High Court dismissed the appeal, citing the coverage of the issue against the revenue in previous judgments.

Overall, the judgment revolved around the dispute regarding the addition of expenses against exempted income under Section 14A of the Income Tax Act, the validity of the order under Section 263, and the subsequent legal proceedings and decisions by the Tribunal and CIT(A). The High Court's decision to dismiss the appeal was primarily based on the acknowledgment that the issue had been previously addressed and settled in other cases, leading to the lack of a substantial question of law in the current appeal.