9911796707
TMI Blog2012 (9) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accel ICIM Systems & Services Ltd. is its hundred per cent subsidiary. The assessee filed its return of income on a loss of Rs. 1,88,34,771/-. Initially the return was processed under section 143(1) of the Act. Thereafter, the Assessing Officer issued notice under section 148 to proceed on an income-escaping assessment. The subject matter of escapement was deemed dividend under section 2(22)(e) of the Act. The reassessment order was passed on 18-11-2009 under section 143(3), read with section 147, making an addition of Rs. 3 crores under section 2(22)(e) of the Act. The above reassessment is challenged by the assessee before the Commissioner of Income-tax(Appeals). It is pending before that authority. 3. Meanwhile, the Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the objections raised by the appellant in regard to the issue of limitation. It is respectfully submitted that the assessment for 2002-2003 was completed u/s 143(1) by intimation dated 28.02.2003 and as such the period of limitation u/s 263 expired on 31.03.2005, being 2 years from the end of the Financial Year in which the assessment was originally completed. 4. It is submitted that the re-opening of the assessment u/s 148 by notice dated 28.012009 and the consequential assessment completed on 18.11.2009 would not extend the period of limitation. The contrary view taken by the Commissioner of Income Tax, is illegal and unsustainable as per the decision of the Hon'ble Supreme Court in the case of CIT v. Alagendran Finance Ltd., reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited and credited in the appellant's Bank account. The dividend from M/s Accel Frontline Ltd., which is the subsidiary Company, was credited to the appellant's Bank account in the same Bank and in the same branch. Therefore, factually, there is no expenditure incurred which had been claimed as 'deduction'. 9. In this connection, the Commissioner of Income Tax also failed to consider that Sub Sec.(2) of Sec.14A was enacted only with effect from 1st April, 2007 and had no application to the ay 2002-2003. It is submitted that a notional disallowance of expenditure is not contemplated." 5. We heard Shri T.M. Sreedharan, the learned counsel appearing for the assessee and Shri Anirudh Rai, the learned Commissioner of Income-tax appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A of the Act. Section 14A of the Income-tax Act, 1961 has been functionally made operative on introduction of Rule 8D of the Income-tax Rules, 1962. The said Rule 8D is inserted by the Income-tax (Fifth Amendment) Rules, 2008 with effect from 24-3-2008. Therefore, section 14A, read with Rule 8D, is not applicable to the impugned assessment year 2002-03. Section 14A(1) itself has been brought into the statute book by the Finance Act, 2006 with effect from 1st April, 2007. Therefore, the functional operation of section 14A is not applicable to the impugned assessment year 2002-03. Therefore, if we confine the scope of the enquiry made by the Commissioner of Income-tax to section 14A as such, we find that the revision order is not sustainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come and, therefore, there was no occasion for the assessee to claim any such expenditure in computing its taxable income. When this argument is placed before the Commissioner of Income-tax, it is necessary for the Commissioner of Income-tax, atleast prima facie, to make out a case that certain amount claimed by the assessee as deduction in its computation of income de facto related to earning of tax-free income. In the absence of such a prima facie finding, it is not possible to hold that the reassessment order passed by the assessing authority is erroneous. Therefore, in the circumstances, we find that the impugned revision order passed by the Commissioner of Income-tax is not sustainable on facts also. 9. In the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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