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TMI Blog2021 (1) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... e, then the PCIT cannot have parallel jurisdiction to examine the same issue u/s. 263 proceedings, because if we allow the PCIT to have jurisdiction on said issue then it leads to multiple proceedings which is not the intention of the Legislature. In this view of the matter and respectfully following the decision in the case of CIT vs. Sera Sera Productions Limited [ 2015 (5) TMI 937 - BOMBAY HIGH COURT] we are of the considered view that the powers exercised by the PCIT u/s.263 of the Act on the issue of disallowance of expenditure u/s.14A of the Act is contrary to the provisions of Clause (c) to Explanation (1) of Section 263 of the Act and hence we are of the considered view that the PCIT has erred in revising the assessment order u/s.263 - Decided in favour of assessee. - ITA No.: 1788/CHNY/2018 - - - Dated:- 28-12-2020 - Shri Mahavir Singh, Vice President And Shri G. Manjunatha, Accountant Member For the Appellant : Shri R. Vijayaraghavan, Advocate For the Respondent : Shri Abani Kantha Nayak,CIT ORDER PER G. MANJUNATHA, AM: This appeal filed by the assessee is directed against the order of the Principal Commissioner of Income Tax - 1, Coimba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been placed on the following judicial pronouncements: I. Commissioner of Income Tax vs Farida Prime Tannery (259 ITR 342), where it has been held that the issues on which the appellate authority had already deliberated, the matter could not be reopened by way of revision. II. The same view has been held in the case of Fortaleza developers vs. commissioner of lncome-Tax-15 (ITA No.2648/MUM/2012), and III. Ranga Jewellers vs Additional commissioner of Income Tax (328 ITR 148) f. Further, the appellant had replied to the notice under section 263 mentioning of the details of the appeal pending before the ITAT regarding the disallowance under section 14A but the Principal Commissioner of income tax passed the order under section 263 without considering the above fact which is not legally tenable. g. For these and such other grounds that may be adduced at the time of hearing. It is prayed that the order u/s263 passed by the Principal Commissioner of Income Tax may kindly be set aside. 3. The brief facts of the case are that the assessee company is primarily engaged in the business of manufacturing of Indian made foreign liquor, filed its return of income for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions of the assessee and by relying upon certain judicial precedents including decision of the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd., vs. CIT was of the opinion that as could be seen from the assessment records, the AO while determining the aggregate amount of disallowance has taken Nil as per Rule 8D(2)(ii) even though the assessee has incurred huge interest expenses of ₹ 5,41,70,506/- by incorrect application of law which rendered the assessment order erroneous in so far as it is prejudicial to the interest of the Revenue. In view of the above, set aside the assessment order passed by the AO u/s.143(3) of the Act dated 01.03.2016 and directed the AO to redo the assessment afresh considering the issues discussed. Aggrieved by the PCIT order, the assessee is in appeal before us. 5. The ld.AR for the assessee submitted that the ld.PCIT has erred in invoking revisional jurisdiction u/s.263 of the Act, even though the order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue. The ld.AR further submitted that the issue of disallowance of expenditure u/s.14A of the Act was subject matter of consideration from the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO towards disallowance of expenditure u/s.14A of the Act before the first appellate authority and was unsuccessful because the ld.CIT(A) has upheld the disallowance computed by the ld.AO. The assessee has preferred further appeal before the ITAT on the same issue which was pending for disposal. In this factual background, if we examine the provisions of Section 263 of the Act, we find that as per clause (c) to explanation (1) of Section 263(1), where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner of Income Tax under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal . A plain reading of Clause (c) to Explanation (1), makes it very clear that the PCIT shall have powers u/s.263 of the Act to examine the issues which had not been subject matter of appeal before the appellate authority. In other words, if any issue is a subject matter of appeal before the appellate authority, then the PCIT cannot exercise his powers o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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