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TMI Blog2020 (8) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... utandis to the appeal of the assessee for A.Y.2014-2015 also. 3. Grounds raised in ITA No.319/CTK/2018 for A.Y.2013-2014 are as under :- 1. That the notice issued under section 263 by the Principal Commissioner of Income Tax, Sambalpur (hereinafter referred to as Pr. CIT ) and the order passed under section 263 is unjustified, arbitrary, excessive, contrary to evidences and bad in law. 2. That having regard to the facts and circumstances of the case, Pr. CIT has erred in law and on facts in assuming jurisdiction in passing the order u/s 263, more so when the assessment order passed under section 143(3) is neither erroneous nor prejudicial to the interest of Revenue. 3. That The Pr. CIT has failed to consider that the Assessing Officer had invoked section 14A of the Income Tax Act, 1961 and disallowed ₹ 5,53,606/- towards interest paid, which shows that assessment was framed after application of mind and considering the replies of the assessee filed on different dates. 4. That The Pr. CIT has not provided sufficient opportunity to the assessee to present its case with all evidences. 5. That on the facts and in the circumstances of the case The Pr. CIT has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disallowed any amount u/s.14A of the Act. The AO while framing the assessment order overlooked the applicability of Section 14A of the Income Tax Act. Accordingly, the Pr. CIT calculated the disallowance u/s.14A of the Act to the tune of ₹ 38,62,424/- and directed the AO to modify the assessment order already framed in which the AO has disallowed a sum of ₹ 5,53,606/-. Accordingly, net disallowance u/s.14A of the Act was computed by the Pr. CIT of ₹ 33,80,818/- (₹ 38,62,424 5,53,606). Ld. Pr.CIT found that the assessment order was erroneous as well as prejudicial to the interest of revenue and relied many judgments which has been calculated in his revisonary order as under :- i) CIT Vs. Walfort Stock Brokers Pvt. Ltd. (2010) 326 ITR 1 (SC); ii) CIT Vs. V.P.Gopinathan (2001) 248 ITR 449 (SC); iii) Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83 (SC); and iv) Dawjee Dadabhoy Co. Vs. S.P.Jain (1957) 31 ITR 872 (Cal.) 5. Against the above order passed by the Pr. CIT, the assessee is in appeal before the Income Tax Appellate Tribunal. 6. Ld. AR at the outset of hearing he did not press on the legal ground raised by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgement is reproduced below; that the interest free funds available to the assessee were sufficient to meet its investment Hence, it could be presumed that the investments were made from the interest free funds available with the assessee. A photocopy of the judgement is enclosed as Annexure-7 (Page No.21-27). PR. Commissioner of Income Tax-4 Vs. Sintex Industries Ltd.: The Hon' bie High Court of Gujrat held as under: Considering the aforesaid facts and circumstances, more particularly the fact that the assessee was already having its own surplus fund and that too to the extent of ₹ 2319,17 Crores against which investment was made of ₹ 111.09 Crores, there was no question of making any disallowance of expenditure in respect of interest and administrative expenses under Section 14A of the Act. That SLP against the order filed with the Hon'ble Supreme Court was dismissed. c. Moreover, the appellant has earned exempted income of ₹ 1,56,881/- only during the relevant assessment year, but an amount of ₹ 38,62,424/-has been disallowed U/S.14A of the Income Tax Act, 1961. In this regard your honour's ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. We have heard learned counsel for the appellant-revenue. 4. It is not disputed by the learned counsel for the appellant-revenue that the issue involved in the present case stands concluded against the revenue in ITA No. 270 of 2016, Pr. CIT v. State Bank of Patiala [2017] 393 ITR 476/88 taxmann.com 667 (Punj. Har.) decided on 27.02.2017 wherein after considering the relevant provision and the case law on the point, it was recorded as under:- After hearing learned counsel for the parties, we notice that the issue on merits has been decided in favour of the assessee in State Bank of Patiala's case (supra) [(2017) 78 Taxman.com 3]. The amount of disallowance under Section 14A was restricted to the amount of exempt income only and not at a higher figure. Once that was so, we do not consider it appropriate to discuss the scope of Section 263 of the Act as the same has been rendered academic in view of the issue being answered in favour of the assessee on merits. Thus, no substantial question of law arises. Consequently, the appeal stands dismissed. Similar decision was taken by this Court in ITA No. 193 of 2017, Pr. CIT v. State Bank of Patiala decided o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenging the judgment of the Punjab and Haryana High Court in State Bank of Patiala also fail, though law in this respect has been clarified hereinabove. 11. Respectfully following the above judgments of Hon ble Supreme Court, we restrict the disallowance u/s.14A of the Act upto the exempt income received by the assessee during the impugned assessment year. 12. Now, we shall take up the appeal of the assessee for A.Y.2014-2015 in ITA No.160/CTK/2019, wherein the assessee has raised the following grounds of appeal :- 1. That the notice issued under section 263 by the Principal Commissioner of Income Tax, Sambalpur (hereinafter referred to as Pr. CIT ) and the order passed under section 263 is unjustified, arbitrary, excessive, contrary to evidences and bad in law. 2. That having regards to the facts and circumstances of the case, Pr. CIT has erred in law and in facts in assuming jurisdiction in passing the order u/s 263, more so when the assessment order passed under section 143(3) is neither erroneous nor prejudicial to the interest of Revenue. 3. That the Pr. CIT has failed to consider that the Assessing Officer had invoked section 14A of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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