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TMI Blog2019 (11) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) had already decided the issue in favour of the assessee, the Ld. Pr. CIT could not have exercised his revisionary powers u/s 263 of the Act. If the department was aggrieved by the order of the Tribunal deleting the disallowance, proper recourse would have been to approach the higher forum. Therefore, we are of the considered opinion that the jurisdiction u/s 263 of the Act could not have been invoked by the Pr. CIT in this case. Accordingly we quash the assumption of jurisdiction u/s 263 of the Act by the Ld. Pr. CIT. We have not examined other merits of the matter. Appeal filed by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2,12,73,864/- in accordance with clause (iii) of subrule (2) of Rule 8D. The AO has computed the disallowance under rule 8D (2)(iii) at ₹ 4,05,51,458/- and added the excess disallowance of ₹ 1,92,77,595/-. 4.1.3 From the P&L account it is seen that the total amount debited was ₹ 3,36,56,041/-. From the computation of income it is evident that out of the above the appellant has suo moto added back the amounts debited in the P&L account of ₹ 1,24,87,347/- (out of interest on late deposit of TDS (₹ 320/-), Contingent Provisions against Standard Assets (₹ 20,13,436/-), depreciation as per accounts (₹ 20,15,945/-), out of amount written off (₹ 76,75,079), out of misc. expenses - subscription (₹ 30,000/-), leave encashment u/s 43B (₹ 22,778/-) gratuity u/s 40A(7)(₹ 80,248), out of Deb. Issue exp. (₹ 5,54,858/-) and security transaction taxd (₹ 94,683/-) in the computation of income as inadmissible expenses. Besides the above, expenditures of ₹ 2,19,52,010/- being related to exempt income was also disallowed and added back suo moto u/s 14A by the appellant in the computation of income. Thus, the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e can be imputed. In view of this, we dismiss ground No.1 to 3 of the appeal of the revenue." 2.3 In the interregnum i.e., when the revenue's appeal was pending disposal before this Tribunal, a show cause notice u/s 263 of the Act was issued by the Ld. PCIT proposing to revise the order of assessment passed u/s 143(3) of the Act dated 17thJune, 2013. In the show cause notice it was alleged by the Ld. PCIT that the AO, while the passing order u/s 143(3) of the Act, had wrongly computed the disallowance u/s 14A at ₹ 4,05,51,458/- whereas as per the Ld. PCIT, the correct disallowance u/s 14A worked out at ₹ 14,45,00,128/-. In this regard it will be relevant to reproduce the show cause notice of Ld. PCIT as under:- "An addition of ₹ 1,92,77,595/- was made by the AO on account of disallowance u/s 14A of the Act computed as per clause (iii) of sub rule 2 of rule 8D by holding that the assessee has not correctly computed disallowance in terms of provisions of rule 8D(2)(iii). The assessee had contended in the assessment proceedings that the disallowance as per rule 8D(2)(iii) cannot exceed the total expenditure incurred and claimed by it during the year. However, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The Ld. PCIT, however, was unconvinced and in the impugned order he has set aside the order of assessment dated 17th June, 2013 for a fresh examination of disallowance u/s 14A by observing as under :- "The arguments of the assessee cannot be accepted because of the following:- 1. The assessee has strongly argued that the entire interest costs are directly related to investments from which income is earned. However, there are investments from which exempt income is earned such as dividend from mutual funds. Thus, the claim of the Assessee cannot be accepted. This aspect of the case has not been examined by the Assessing Officer. 2. The Assessing Officer has not properly conducted detailed enquiries on the submissions made by the assessee during the course of assessment proceedings. 3. It is erroneous for the assessee to claim that there is no interest expenditure incurred towards making investments. An element of interest is always inherent and involved as investments entail capital costs. Moreover, the amount have been invested by the assessee towards the business of mutual funds, from which exempt income is also earned by the assessee in the shape of divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out considering the submissions made by the Appellant Company in reply to the show cause notice. 2. That the Order passed by the Ld.CIT dated 7th March, 2016 is bad in law and deserves to be quashed as the same has been passed without taking into consideration the correct facts in regard to case of the appellant and the legal position. 3. That the Ld.CIT failed to appreciate that the issue regarding disallowance u/s 14A of the Act r.w.r. 8D had been fully examined by the AO while passing the Order of Assessment u/s 143(3) of the Act and therefore, the aforesaid Order cannot be considered as erroneous and prejudicial to the interest of revenue in view of settled legal position by the Hon'ble Supreme Court vide decisions in the cases of Malabar Industrial Co. Ltd. vs. CIT - (2000) 243 ITR 83 (SC) and CIT vs. Max India Ltd. - (2007) 295 ITR 282 (SC), even if the Ld.CIT had different opinion in regard to the issue as compared to the view taken by the AO. 4. That the Ld.CIT also erred in observing that the Assessment Order was passed by the AO without making necessary and proper verification of claims u/s 14A made by the assessee and no proper enquiries have been conducted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law and void ab-initio. In support of his case, the Ld. AR relied upon following decisions: * Joint Investments P. Ltd vs. CIT reported in 372 ITR 696 (Del.) * PCIT vs. Empire Package P. Ltd reported in 286 CTR 457 (P/H.) * CIT vs. Vision Finstock Ltd reported in 2017-TIOL- 2778-HC-AHM-IT * CIT vs. Vision Finstock Ltd reported in 2018-TIOL- 217-SC-IT * Vision Finstock Ltd vs. ACIT reported in 2016-TIOL- 2808-ITAT-AHM * Ranbaxy & Fern Healthcare P Ltd for A.Y. 2008-09 & 2009-10 in ITA No. 3108/Del/2011 & 3682/Del/2013. 4.0 On the other hand, the Ld. CIT (DR) supported the order passed by Ld. PCIT and it was submitted by her that for reasons recorded in impugned order the Ld. PCIT has validly assumed jurisdiction to revise the assessment u/s 263 of the Act. 5.0 We have heard the rival submissions and have also perused the material available on record. The undisputed facts are that for the year under consideration, dividend income of ₹ 1,10,58,833/- was earned by the assessee which was claimed as exempt and not liable to tax. In the return of income, the assessee had, suo moto made a disallowance u/s 14A of the Act to the tune of ₹ 2.13 crores. The AO, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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