Revisionary jurisdiction under section 263 upheld for inadequate enquiry into interest expenditure and section 14A applicability.

Revisionary jurisdiction under section 263 was upheld where the assessment under section 143(3) was found to have been completed without adequate enquiry into the assessee's claim of interest expenditure and the utilisation of borrowed funds. The Principal Commissioner's intervention was confined to verification of the claim and examination of the applicability of section 14A, with those matters left open for consequential proceedings. The challenge to the exercise of revisionary power therefore failed, and the revision order was sustained.

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Issues: Whether the Principal Commissioner was justified in exercising revisionary jurisdiction under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer had not examined the claim of interest expenditure and the applicability of section 14A, including the utilisation of borrowed funds.

Analysis: The assessment had been completed under section 143(3) of the Income-tax Act, 1961. The Principal Commissioner found that the Assessing Officer had not made adequate enquiry into the assessee's claim of interest expenditure and the manner in which the borrowed loan funds were utilised. The revision was confined to verification of the claim and the applicability of section 14A, with the matter left open for examination in the consequential proceedings.

Conclusion: The revision order was sustained and the challenge to the exercise of jurisdiction under section 263 failed.

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