9911796707
TMI Blog2025 (3) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... 04, 33, 197, claimed in the return of income, minus INR 24, 00, 56, 462, actual expenditure incurred by the assessee). Thus, it was submitted that the disallowance should be restricted to only INR 8, 03, 76, 735 instead of INR 10, 68, 11, 066 directed by the learned PCIT. Having considered the submissions and perused the material available on record, we are of the considered view that revision proceedings u/s 263 have been correctly initiated in respect of this issue. However, the AO is directed to disallow an amount of INR 8, 03, 76, 735 being the excess amount allowed to the assessee as a deduction under section 35CCC of the Act. Accordingly, to this extent, the impugned order passed under section 263 of the Act is upheld. Disallowance u/s 14A - From the multiple notices issued by the AO on this issue from time to time during the assessment proceedings, it cannot be concluded that this aspect was not examined by the AO or there was no application of mind. We find that in Reliance Communication Ltd [2016 (4) TMI 173 - BOMBAY HIGH COURT] held that the fact that the AO did not make any reference in the assessment order cannot make the order erroneous when the issues were indeed l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, Mumbai - 6 ["learned PCIT"], for the assessment year 2018-19. 2. In this appeal, the assessee has raised the following grounds: - "1. The Pr. Commissioner of Income Tax erred in assuming jurisdiction u/s. 263, when the jurisdictional conditions were not satisfied. 2. The Pr. Commissioner of Income Tax erred in assuming jurisdiction u/s. 263 on issues which were duly inquired into/ looked at by the Assessing Officer during the course of assessment proceedings. 3. The Pr. Commissioner of Income Tax erred in passing an order u/s. 263 on issues where two views were possible and the Assessing Officer had taken a plausible view. 4. The Pr. Commissioner of Income Tax erred in passing the order u/s. 263 of the Act when the assessment order passed under section 143(3) r.w.s. 144B was neither erroneous nor prejudicial to the interest of Revenue. 5. The Pr. Commissioner of Income Tax erred in directing the Assessing Officer to compute the disallowance under section 14A by invoking with Rule 8D. 6. The Pr. Commissioner of Income Tax erred in directing the Assessing Officer to disallow the depreciation u/s. 32 in respect of the office premises acquired by the Appellant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the suo moto disallowance made by the assessee under section 14A of the Act is not in conformity with the past precedents, and therefore, clearly lacks enquiry and application of mind. Further, with respect to the issue of depreciation on land, the learned PCIT held that the AO allowed the claim of the assessee without proper enquiry and application of mind. As regards the deduction claimed under section 35CCC of the Act, the learned PCIT held that the AO overlooked the aspect that the assessee gave up its claim for weighted deduction and requested the AO to restrict the deduction in respect of the expenditure incurred on agriculture extension activity to the actual expenditure incurred. Accordingly, the learned PCIT held that the assessment order passed by the AO under section 143(3) read with section 144B of the Act is erroneous insofar as it is prejudicial to the interest of the Revenue on the aforenoted issues and directed the AO to re-assess the income after providing an opportunity of being heard to the assessee. Being aggrieved, the assessee is in appeal before us. 7. We have considered the rival submissions and perused the material available on record. The impugned revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Vide impugned order, the learned PCIT held that in the assessee's own case, in earlier years, the disallowance under section 14A of the Act was made as per Rule 8D, and therefore, the action of the AO in accepting the suo moto disallowance made by the assessee is not in conformity with the past precedents and therefore clearly lacks enquiry and application of mind. The learned PCIT further held that the assessment order has not been made in accordance with the CBDT's Circular No. 5 of 2014, which mandates the AO to compute the disallowance under section 14A of the Act in accordance with the method prescribed in Rule 8D of the Rules. Accordingly, the learned PCIT held that the case falls under the purview of clause (c) of Explanation-2 to section 263 of the Act. 9. From the perusal of the factual paper book placed on record by the assessee, we find that the return filed by the assessee was selected for scrutiny through CASS, and notice under section 143(2) of the Act was issued on 23/09/2019, inter-alia, for examining the expenses incurred by the assessee for earning exempt income. In this regard, the AO issued a notice under section 142(1) of the Act on 06/03/2020, formin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04/2021, forming part of the paper book from pages 49-167, the assessee, inter-alia, furnished all the details as sought for by the AO. 10. Therefore, from the perusal of the notices issued by the AO during the assessment proceedings and the reply filed by the assessee thereto, we find that this issue was specifically raised during the scrutiny assessment proceedings and the same was duly replied to by the assessee. Therefore, from the multiple notices issued by the AO on this issue from time to time during the assessment proceedings, it cannot be concluded that this aspect was not examined by the AO or there was no application of mind. We find that the Hon'ble Jurisdictional High Court in CIT v/s Reliance Communication Ltd, reported in [2016] 69 taxmann.com 103 (Bom.), held that the fact that the AO did not make any reference in the assessment order cannot make the order erroneous when the issues were indeed looked into. 11. Further, as regards the non-compliance with the CBDT's Circular No. 5 of 2014, we find that the said Circular was issued in the backdrop of controversy as to whether disallowance can be made by invoking the provisions of section 14A of the Act even in those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts claimed this year. Responding to the said notice, the assessee vide its reply dated 13/04/2021, forming part of the paper book from pages 49-167, more particularly from pages 58-69, inter-alia submitted its detailed response and also clearly mentioned the disallowance of depreciation in respect of the value of land in the preceding assessment years 2016-17 and 2017-18. The assessee by referring to the agreement dated 30/03/2012, a copy of which was also furnished by the assessee along with its reply, submitted that it purchased an under-construction office premises, possession of which was given in the financial year 2015-16. The assessee submitted that on receipt of the possession, it has capitalised the said office premises and the cost of acquisition and other incidental expenses aggregating to INR 82, 96, 65, 374 are added to the block of asset "Building". Accordingly, the depreciation under section 32 of the Act was claimed at the rate of 10% on the cost of acquisition shown under the head "Building". It is evident from the reply of the assessee that specific reference was made to the queries raised by the AO, during the assessment proceedings for the assessment year 2016-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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