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TMI Blog2020 (4) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... has not disallowed any disallowance in this respect u/s.14Ar.w.r 8D of the Rules. AO observed that the assessee s case was selected for scrutiny for verification of large interest expenses relatable to exempt income and during the assessment proceedings when the assessee explained the aforesaid facts, the AO agreed with the assessee that it had not incurred any interest expenditure for earning the exempt income. AO has rightly not disallowed/made any disallowance/expenses especially the interest expenditure for earning any exempt income which is a plausible view. The order of the AO passed u/s. 143(3) of the Act cannot be faulted with for non-invocation of section 14A/r.w.r 8D for such disallowance. Conditions precedent for invoking R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the AO has not disallowed the interest expenses to earn exempt income by applying the provisions of section 14A r.w.r 8D of the Rules, according to the ld. PCIT the assessment order of the AO dt. 30-06-2016 passed u/s. 143(3) of the Act is erroneous in so far as prejudicial to the interest of the revenue. Therefore, he invoked revisional jurisdiction u/s. 263 of the Act and was pleased to set aside the said assessment order passed u/s. 143(3) of the Act dt. 30-06-2016 and directed him to make fresh assessment. Aggrieved, by the action of ld. PCIT the assessee is before us. 4. Having heard both the parties and on perusal of the records, we note that the AO in the assessment order framed u/s. 143(3) of the Act has observed that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -08-2016 and directed the AO to make fresh assessment on this specific issue by making proper enquiries with regard to expenses incurred against the exempt income and whether the interest expenses unclaimed was more than the disallowance under section 14A read with Rule 8D of Rules. 5. It was brought to our notice by the ld.AR that during the revisional proceedings u/s. 263 of the Act before the ld. Pr. CIT the assessee has brought to the notice that the assessee was maintaining two separate P L accounts one for derivatives and the other for his business. It was brought to our notice that in respect of derivatives trading, interest expenses incurred has been separately debited in the P L account of Derivatives Business for the year e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the discussion (supra therefore, we are of the view that the AO has rightly not disallowed/made any disallowance/expenses especially the interest expenditure for earning any exempt income which is a plausible view. The order of the AO passed u/s. 143(3) of the Act cannot be faulted with for non-invocation of section 14A/r.w.r 8D for such disallowance. Moreover the conditions precedent for invoking Rule 8D is that if the AO is not satisfied with the explanation of assessee in respect of expenditure incurred for earning exempt income, then only the AO need to resort to Rule 8D, which is not the case here. Since the order of AO is not erroneous as well as prejudicial to interest of Revenue, the conditions precedent for invoking revisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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