The Tax Publishers2019 TaxPub(DT) 8449 (Sur-Trib)

INCOME TAX ACT, 1961

Section 263 Section 14A Section 57(iii)

Since view taken by the AO was plausible view, which cannot be disturbed by the Pr. CIT because twin conditions were not satisfied for invoking jurisdiction under section 263 in absence of the same the Pr.CIT was, therefore, not correct to exercise jurisdiction under section 263.

Revision under section 263 - Condition precedent not satisfied - Disallowance under section 14A read with rule 8D and claim under section 57(iii) allowed by AO - Plausible view of AO

On the issue of disallowance under section 14A read with rule 8D, assessee had stated that there was negative income (loss) from the partnership firm, however the Principal CIT was of the view that CBDT Circular No. 05/2014 dt. 11-2-2014 clarifies that Rule 8D in section 14A provides for disallowance of expenditure even where tax-payer in a particular year had not earned any exempt income. On the issue of claim of deduction of interest expenses under section 57(iii), assessee had stated that section 57(iii) had been wrongly interpreted. When the family control group initiating a view and its shares have been purchased by the assessee hose also director by taking loan on interest the deduction claim under section 57(iii) was therefore, not allowable. The Pr.CIT thus held that assessment order passed under section 143(3) by the AO was erroneous and so far it justifiable interest of the revenue, hence, the assessment was set aside with the direction to frame the same after taking into account, the observation made by this Pr. CIT for disallowance under section 14A read with rule 8D and the claim undr section 57(iii) was to be properly verified. Held: Pr. CIT had not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the revenue. The AO had adopted one possible legal view sustainable in law on the issue and mere invoking proviso based on revenue audit objection amounts non application of mind. Merely just because the view taken by the AO was not found acceptable does not mean that the AO had failed to make requisite enquiries. Thus, view taken by the AO was plausible view, which cannot be disturbed by the Pr. CIT because twin conditions were not satisfied for invoking the jurisdiction under section 263. In absence of the same the Pr.CIT was, therefore, not correct in exercise the jurisdiction under section 263.

Relied:CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) and Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC); CIT v. Rajendra Prasad Moody (1978) 115 ITR 579 (SC) : 1978 TaxPub(DT) 1028 (SC); Sri Satyasai Properties and Investment (P.) Ltd. v. CIT (2014) 361 ITR 641 (Cal.-HC) : 2014 TaxPub(DT) 1239 (Cal-HC).

REFERRED : CIT v. Corretech Energy (P.) Ltd. (2014) 45 taxmann.com 116 (Guj); Principal CIT v. GVK Project and Technical Services Ltd. (2019) 106 taxmann.com 181 (SC) : 2019 TaxPub(DT) 3446 (SC); Principal CIT v. State Bank of Patiala (2018) 99 taxmann.com 285 (P&H) : 2018 TaxPub(DT) 6816 (P&H-HC); 2018, (2019) 99 taxmann.com 286 (SC) : 2019 TaxPub(DT) 0976 (SC); CIT v. Srishti Securities (P.) Ltd. (2010) 321 ITR 498 (Bom) : 2010 TaxPub(DT) 0313 (Bom-HC); Vodafone International Holdings B.V v. UOI (2012) 341 ITR 1 (SC) : 2012 TaxPub(DT) 0370 (SC); decision of ITAT, 'C' Bench, Bombay in ITA No. 4649/Mum/2008 : 2013 TaxPub(DT) 1006 (Mum-Trib); Pistabai Rikhabchand Kothari v. ITO, 14(1)(3) dt. 23-1-2013

FAVOUR : In assessee's favour.

A.Y. : 2014-15



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