2021 (12) TMI 1399 - HC - Income Tax

Revision u/s 263 - Section 115JB of the Act applicability with respect to the disallowance u/s 14A - Tribunal held that Section 14A disallowance amount cannot be added to assessee s income for the purpose of computation of income under Section 115JB relying upon the decision of Vireet Investment (P) Ltd. 2017 (6) TMI 1124 - ITAT DELHI and also holding that issue of debatable and as such the CIT ought not to have taken up for revision under Section 263 - HELD THAT - As Respondent submits that the issue in as much as Section 115JB of the Act whether applicable with respect to the disallowance under Section 14A of the Act is already covered on merits and as such examining the question whether CIT (Appeals) had jurisdiction to invoke Section 263 of the Act would render academic. No substantial question of law arises.

Summary

Issues:
1. Challenge to the order passed by the Income Tax Appellate Tribunal (ITA) for the assessment year 2010-11 under Section 260A of the Income Tax Act, 1961.
2. Substantial questions of law regarding the Tribunal's decision on the revision order under Section 263 of the Act and the applicability of Section 115JB to disallowance under Section 14A.

Analysis:
1. The appeal filed by the revenue challenges the ITA order for the assessment year 2010-11 under Section 260A of the Income Tax Act, 1961. The Tribunal allowed the appeal by setting aside the Commissioner of Income Tax's (CIT) revision order under Section 263 of the Act. The first substantial question of law raised is whether the Tribunal was correct in law to set aside the CIT's revision order. The second question pertains to the Tribunal's decision on the applicability of Section 115JB to the disallowance under Section 14A. The Tribunal relied on the decision of the Special Bench in the case of Vireet Investment (P) Ltd. and considered the issue debatable, indicating the CIT should not have invoked Section 263 of the Act.

2. The respondent's Senior Counsel argued that the issue of whether Section 115JB is applicable to the disallowance under Section 14A has been adequately addressed on merits. Therefore, discussing the CIT's jurisdiction under Section 263 would be academic. The Counsel for the revenue did not contest this submission. Consequently, the Court found no substantial question of law requiring consideration. The appeal was disposed of in accordance with the order in the assessee's own case dated 27.07.2021.

This judgment clarifies the Tribunal's authority to set aside the CIT's revision order under Section 263 and the applicability of Section 115JB to disallowances under Section 14A. The decision emphasizes the importance of addressing substantial questions of law and ensuring that debatable issues are appropriately considered within the legal framework of the Income Tax Act, 1961.