Tribunal overturns Principal Commissioner's order under section 263 of Income Tax Act for AY 2017-18

M/s. Think and Learn Private Limited Versus Principal Commissioner of Income Tax - 3, Bengaluru.

M/s. Think and Learn Private Limited Versus Principal Commissioner of Income Tax - 3, Bengaluru. - TMI Issues:
Appeal against order under section 263 of the Income Tax Act, 1962 for Assessment Year 2017-18.

Analysis:
1. The assessee, a company providing online learning services, filed a return of income for Assessment Year 2017-18. The Assessing Officer (AO) made several additions to the total income, including disallowances under various sections totaling Rs. 30,48,95,804.
2. The assessee applied to the Authority for Advance Ruling (AAR) regarding a payment to a UAE company, which was dismissed as the issue was pending before the AO. The AO passed an order making the same disallowance, despite knowledge of the AAR application.
3. The Principal Commissioner of Income Tax (PCIT) found the AO's order erroneous and prejudicial to revenue as the AAR's ruling was not considered. The PCIT set aside the order and directed a fresh assessment.
4. The assessee argued that the PCIT's order was unjustified, citing precedents and claiming no prejudice to revenue due to the disallowance already made by the AO.
5. The Tribunal noted that the AO's decision on the UAE company payment was already under appeal, thus not prejudicial to revenue. The PCIT's order was quashed as the twin conditions for invoking section 263 were not met.

This detailed analysis covers the issues involved in the legal judgment, the actions of the parties, and the reasoning behind the Tribunal's decision to allow the assessee's appeal against the PCIT's order under section 263 of the Income Tax Act, 1962 for the Assessment Year 2017-18.